Longevity Risk and Capital Accumulation under the Current China Pension System

This paper employs a stochastic OLG (overlapping-generations) model with time-varying instantaneous mortality rates to analyze the relationship between longevity risk and capital accumulation under the current China pension system. By employing a dynamic mortality table, our numerical simulation suggests that longevity risk does increase capital accumulation. Furthermore, we find that the current state pension arrangement cannot initiate capital accumulation.