Pensions' reform in most Western, Central and Eastern European countries is one of the most important topics relevant for their future development. The main objective of this study is to assist in predicting the future of the pension scheme in Albania through actuarial projections related to demographic structure, unemployment, number of contributors and beneficiaries. Through this study, we intended to predict what would be the financial effect of two options. First, we investigate the likely outcome if Albania continues with the same scheme as currently used. Second, we investigate the likely outcome when a new contributory scheme is being implemented. The methodology used for implementing the actuarial model is based on the construction of the population projections using the RUP system (Rural Urban Projection), a system developed by the Census Bureau of the United States of America, while the economic performance forecasts, i.e.: GDP, inflation rate, unemployment rate or expected indexation of wages and pensions, are be sourced by the Albanian Ministry of Finance and the International Monetary Fund. The study concludes and recommends some of the steps for reforming the pension scheme in Albania based on the experience of other countries and the likely financial effect to the state budget in case of the implementation of the new scheme.

C19, the pension system has an important role in developing countries’ economies. It is very important in the context of the social security. During the last two decades, pension plan in Albania, has passed important transformation in all aspects. So the first goal is maintaining the stability of this system. The aim of this paper is to analyze the efficiency and sustainability of the existing pension system in the Albania and the identification of key factors, which determine its further stability. We should point out that life insurance market and pension plan in Albania are noticeably underdeveloped compared to other European countries, but in the recent years it has been developing moderately under the influence of various factors. Many economic factors have an impact on it, and some of them are globalization, global economic crisis and expressed instability of financial markets. Other factors like demographic factors: mortality rate, life expectancy and net migration have also impact on retirement risk, but in this paper we will analyze and indicate the most significant economic and demographic factors.

C19 Life insurance companies deal with two fundamental types of risks when issuing annuity contracts: financial risk and demographic risk. As regards the latter, recent work has focused on modelling the trend in mortality as a stochastic process. A popular method for modelling death rates is the Lee-Carter model. In this paper we gives an overview of the Lee Carter model and the feasibility of using it to construct mortality forecast for the population data. In particular, we focus on a sensitivity issue of this model and in order to deal with it, we illustrate the implementation of an experimental strategy to assess the robustness of the LC model. The next step, we experiment and apply it to a matrix of mortality rates. The results are applied to a pension annuity. There are investigating in particular the hypothesis about the error structure implicitly assumed in the model specification, after having assume that errors are homoscedastic. Analyzing the model it is estimated that the homoscedasticity assumption is quite unrealistic, because of the observed pattern of the mortality rates showing a different variability at different ages. Therefore, there is an emerging opportunity to analyze the strength of predictable parameter. The purpose of this study is a strategy in order to assess the strength of the Lee-Carter model inducing the errors to satisfy the homoscedasticity hypothesis. The impact of Lee Carter model on various financial calculations is the main focus of the paper. Furthermore, it is applied it to a matrix of mortality rates including a pension rate portfolio. The Albania model with the variables of death and birth is shown on this paper taken in consideration the Lee Carter Error.

C19Life insurance companies deal with two fundamental types of risks when issuing annuity contracts: financial risk and demographic risk. As regards the latter, recent work has focused on modelling the trend in mortality as a stochastic process. A popular method for modelling death rates is the Lee-Carter model. In this paper we gives an overview of the Lee Carter model and the feasibility of using it to construct mortality forecast for the population data. In particular, we focus on a sensitivity issue of this model and in order to deal with it, we illustrate the implementation of an experimental strategy to assess the robustness of the LC model. The next step, we experiment and apply it to a matrix of mortality rates. The results are applied to a pension annuity. There are investigating in particular the hypothesis about the error structure implicitly assumed in the model specification, after having assume that errors are homoscedastic. Analyzing the model it is estimated that the homoscedasticity assumption is quite unrealistic, because of the observed pattern of the mortality rates showing a different variability at different ages. Therefore, there is an emerging opportunity to analyze the strength of predictable parameter. The purpose of this study is a strategy in order to assess the strength of the Lee-Carter model inducing the errors to satisfy the homoscedasticity hypothesis. The impact of Lee Carter model on various financial calculations is the main focus of the paper. Furthermore, it is applied it to a matrix of mortality rates including a pension rate portfolio. The Albania model with the variables of death and birth is shown on this paper taken in consideration the Lee Carter Error.

C19 Life insurance companies deal with two fundamental types of risks when issuing annuity contracts: financial risk and demographic risk. As regards the latter, recent work has focused on modelling the trend in mortality as a stochastic process. A popular method for modelling death rates is the Lee-Carter model. In this paper we gives an overview of the Lee Carter model and the feasibility of using it to construct mortality forecast for the population data. In particular, we focus on a sensitivity issue of this model and in order to deal with it, we illustrate the implementation of an experimental strategy to assess the robustness of the LC model. The next step, we experiment and apply it to a matrix of mortality rates. The results are applied to a pension annuity. There are investigating in particular the hypothesis about the error structure implicitly assumed in the model specification, after having assume that errors are homoscedastic. Analyzing the model it is estimated that the homoscedasticity assumption is quite unrealistic, because of the observed pattern of the mortality rates showing a different variability at different ages. Therefore, there is an emerging opportunity to analyze the strength of predictable parameter. The purpose of this study is a strategy in order to assess the strength of the Lee-Carter model inducing the errors to satisfy the homoscedasticity hypothesis. The impact of Lee Carter model on various financial calculations is the main focus of the paper. Furthermore, it is applied it to a matrix of mortality rates including a pension rate portfolio. The Albania model with the variables of death and birth is shown on this paper taken in consideration the Lee Carter Error.