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We keep getting older these days. A development that has major consequences for, among other things, the economic system as we know it today. In order to study its impact, Michel Vellekoop, Professor at the UvA’s Amsterdam School of Economics (ASE) recently established a new research centre together with some of his colleagues. ‘We’re all getting older, but the exact life expectancy of different groups in the population varies considerably. It’s important to examine these differences using appropriate statistical techniques.’

The Research Centre for Longevity Risk (RCLR) was officially launched on 6 December 2021. The centre originated from a collaboration between Nationale-Nederlanden (NN) and ASE. However, the insurer has no influence whatsoever on the research carried out by the centre. ‘We determine our research agenda ourselves and act independently of NN,’ says Vellekoop. In addition to his teaching and research responsibilities at ASE, Vellekoop served as interim director of RCLR in its first year. That role has now been handed over to his successor, Professor Torsten Kleinow.

Social and scientific relevance

ASE and Nationale-Nederlanden decided to join forces and entered into a partnership to address a shared concern. ‘The fact that we keep getting older  leads to huge uncertainties,’ according to Vellekoop. ‘What the effects of an increasing life expectancy might be is an interesting and pivotal issue from a social as well as a scientific perspective.’

This is an issue that for example affects our pension system, but is interpreted more broadly within the research centre. The centre will also examine, for example, the influence of socio-economic differences and the impact of epidemics and pandemics on our life expectancy.

Research into differences between population groups

Old age pension schemes such as the Dutch state-run pension plan (AOW) are becoming more expensive in an ageing society where people are living longer. At least, if the level of benefits remains the same. It explains why it is important to look closely at elements that affect life expectancy, such as socio-economic differences.

The centre can provide politicians with scientific insights and advice regarding, for example, the increase of the retirement age. What are the effects of, let’s say, a higher pension age? ‘One of the things we know is that people with physically strenuous jobs have a lower life expectancy than, for instance, researchers at a university. We would like to do more statistical research into such differences and, where necessary, also develop new methods to analyse mortality data in the Netherlands and other countries. We also want to inform policy-makers so that they can take differences in life expectancies into account when making decisions related to pensions.’

Lessons learnt from the corona pandemic

The impact of the corona pandemic is another subject RCLR will look into. Vellekoop elaborates: ‘It’s a very relevant and challenging topic. The methods we used to rely on to model future probabilities of survival turned out to be inadequate for unexpected events such as a pandemic.’  It demonstrates why it is so important to learn from the corona pandemic. With the next outbreak, scientists, insurers, and pension funds will then at least be much better prepared. Vellekoop adds: ‘Thinking more in terms of scenarios is the only way to enable us to keep on predicting mortality figures in these situations.’

Reaching the general public

RCLR aims to share its conclusions and research results with society in an accessible way. ‘Statistics Netherlands (CBS) is very good at producing video clips and infographics nowadays. We scientists sometimes find it difficult to bridge the gap with policy-makers and society, but it’s vital to do so. This is the only way to make society aware of the issues we’re investigating. It’s our aim to strengthen public awareness of the fact that getting older is not just something to be savoured. It’s also a phenomenon that has substantial financial consequences. Living longer is not a risk, it’s an opportunity. But financial problems for the elderly do represent a risk, and must be avoided.’