Total-employed longevity gap, pension fairness and public finance: Evidence from one of the oldest regions in EU

This work analyses the mortality differential between the total and the employed population for the Italian region of Liguria in 2015-2019. Values for life expectancy at ages [65, 74) are used to quantify the transfer mechanism implicitly triggered when, in the case of persistent longevity heterogeneity, a country-wide longevity factor is adopted in calculating pension annuities. Results confirm that a lower mortality force characterises the employed population of Liguria compared to the total population. In terms of implicit tax/subsidy rates, Liguria total population is almost unaffected, being taxed by an average of 0.05% of the fair value for pension. Instead, Liguria employed population is subsidised by 6.24%. Longevity heterogeneity directly impacts on public finances, if not compensated within the same cohort by socio-economic groups living shorter. Some corrective policies are discussed.