![]() The capital market is an important source of financing for viable investment projects and further economic development. Adapting some of the simulation assumptions to fit the Polish case, our results confirm that current regulations underestimate the role of the capital pillar and the optimal allocation between both pillars should be time-varying. Second, we do not base our estimates on historical trends rather, we apply the long-term economy’s projection to account for the society’s ageing impact, which is a crucially important factor for the solvency of the pension system. Moreover, we allow our optimal rule to be time-varying, if necessary, which would be a true novelty in this research area. ![]() First, we do not perform the assessment of the predetermined regulatory solutions, but we look for an optimal one. Our study contributes to the existing literature as follows. Applying the portfolio approach we address this issue by running a series of simulations to find out how to allocate pension contributions between both pillars in an optimal way. It tends to question the consequences of this shift for the future retirement benefits. In the recent decade, there has been observed across the Central and Eastern European states the regulatory trend towards the increase of the non-financial (first) pension pillar size at the expense of the financial (second) pillar. This way we can observe the effect of life expectancy growth on pension fund’s dependency ratio estimates as one of the measures of pension fund’s sustainability. The results of the Republic of Srpska pension fund dependency ratio projections obtained using a forecast of adjusted life tables are compared to the previous research on this topic which used the life tables of the Republic of Serbia for 2013 for the same model. The actuarial projection model for the Pension and Disability Insurance Fund of the Republic of Srpska is upgraded by using these adjusted life tables and the best estimate mortality trend for mortality forecasting. Therefore, this article tries to encompass the problem by using the life tables of the Republic of Croatia as a starting point for adjustment of age-grouped life tables available for population of the Republic of Srpska. The nonexistence of complete upto-date life tables presents a huge problem of the pension system and life insurance industry modelling in the Republic of Srpska. ![]() This article provides an upgraded model for actuarial projection of the dependency ratio of the pension fund in the Republic of Srpska. ![]()
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