Investigating the Sensitivity Effect of Actuarial Assumptions on Pension Liabilities in Malaysia
Malaysia will be an ageing population by 2030 as the number of those aged 60 years and above has increased drastically from 6.2 percent in 2000 and is expected to reach 13.6 percent by 2030. There are many challenges that will be faced due to the ageing population, one of which is the increasing cos...
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University of Baghdad, College of Science for Women
2021-03-01
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| Series: | مجلة بغداد للعلوم |
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| Online Access: | https://bsj.uobaghdad.edu.iq/index.php/BSJ/article/view/5919 |
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| author | Rose Irnawaty Ibrahim Norazmir Mohd Nordin Mohd Zaki Awang Chek |
| author_facet | Rose Irnawaty Ibrahim Norazmir Mohd Nordin Mohd Zaki Awang Chek |
| author_sort | Rose Irnawaty Ibrahim |
| collection | DOAJ |
| description | Malaysia will be an ageing population by 2030 as the number of those aged 60 years and above has increased drastically from 6.2 percent in 2000 and is expected to reach 13.6 percent by 2030. There are many challenges that will be faced due to the ageing population, one of which is the increasing cost of pensions in the future. In view of that, it is necessary to investigate the effect of actuarial assumptions on pension liabilities under the perspective of ageing. To estimate the pension liabilities, the Projected Unit Credit method is used in the study and commutation functions are employed in the process. Demographic risk and salary risk have been identified as major risks in analyzing pension liabilities in this study. The sensitivity analyses will be conducted in the study to investigate how the pension liabilities will be affected when these major risks changes. This study analyzes nine scenarios under assumptions in the actuarial model, namely age of retirement, rate of mortality and rate of salary growth. The result of this study indicates that the implied mortality experience and salary growth rate assumptions have a significant impact on pension liabilities. |
| format | Article |
| id | doaj-art-d578216704074abb8ac97aeaa1e42a3e |
| institution | Kabale University |
| issn | 2078-8665 2411-7986 |
| language | English |
| publishDate | 2021-03-01 |
| publisher | University of Baghdad, College of Science for Women |
| record_format | Article |
| series | مجلة بغداد للعلوم |
| spelling | doaj-art-d578216704074abb8ac97aeaa1e42a3e2025-08-20T03:57:43ZengUniversity of Baghdad, College of Science for Womenمجلة بغداد للعلوم2078-86652411-79862021-03-01181(Suppl.)10.21123/bsj.2021.18.1(Suppl.).0830Investigating the Sensitivity Effect of Actuarial Assumptions on Pension Liabilities in MalaysiaRose Irnawaty Ibrahim0Norazmir Mohd Nordin 1Mohd Zaki Awang Chek2Faculty of Science & Technology, Universiti Sains Islam Malaysia (USIM), Nilai, 71800, Malaysia.Faculty of Science & Technology, Universiti Sains Islam Malaysia (USIM), Nilai, 71800, Malaysia.Center for Actuarial Studies, Faculty of Computer & Mathematical Sciences, Universiti Teknologi MARA (UiTM), Tapah Campus, Tapah Road, 35400 Tapah, Perak, MalaysiaMalaysia will be an ageing population by 2030 as the number of those aged 60 years and above has increased drastically from 6.2 percent in 2000 and is expected to reach 13.6 percent by 2030. There are many challenges that will be faced due to the ageing population, one of which is the increasing cost of pensions in the future. In view of that, it is necessary to investigate the effect of actuarial assumptions on pension liabilities under the perspective of ageing. To estimate the pension liabilities, the Projected Unit Credit method is used in the study and commutation functions are employed in the process. Demographic risk and salary risk have been identified as major risks in analyzing pension liabilities in this study. The sensitivity analyses will be conducted in the study to investigate how the pension liabilities will be affected when these major risks changes. This study analyzes nine scenarios under assumptions in the actuarial model, namely age of retirement, rate of mortality and rate of salary growth. The result of this study indicates that the implied mortality experience and salary growth rate assumptions have a significant impact on pension liabilities.https://bsj.uobaghdad.edu.iq/index.php/BSJ/article/view/5919Pension Liabilities, Ageing; Actuarial Assumptions; Projected Unit Credit Method |
| spellingShingle | Rose Irnawaty Ibrahim Norazmir Mohd Nordin Mohd Zaki Awang Chek Investigating the Sensitivity Effect of Actuarial Assumptions on Pension Liabilities in Malaysia مجلة بغداد للعلوم Pension Liabilities, Ageing; Actuarial Assumptions; Projected Unit Credit Method |
| title | Investigating the Sensitivity Effect of Actuarial Assumptions on Pension Liabilities in Malaysia |
| title_full | Investigating the Sensitivity Effect of Actuarial Assumptions on Pension Liabilities in Malaysia |
| title_fullStr | Investigating the Sensitivity Effect of Actuarial Assumptions on Pension Liabilities in Malaysia |
| title_full_unstemmed | Investigating the Sensitivity Effect of Actuarial Assumptions on Pension Liabilities in Malaysia |
| title_short | Investigating the Sensitivity Effect of Actuarial Assumptions on Pension Liabilities in Malaysia |
| title_sort | investigating the sensitivity effect of actuarial assumptions on pension liabilities in malaysia |
| topic | Pension Liabilities, Ageing; Actuarial Assumptions; Projected Unit Credit Method |
| url | https://bsj.uobaghdad.edu.iq/index.php/BSJ/article/view/5919 |
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