Abstract

Under a unified pension system, subnational differences in longevity can translate into implicit pension redistribution through differences in the expected duration of pension receipt. Using Japan as a case study, this paper examines the implicit pension redistribution induced by subnational longevity heterogeneity and analyzes how its measurement varies across spatial scales. Accurate measurement of future redistribution requires forecasts of subnational mortality rates, from which future remaining life expectancy can be derived. Because mortality series at different spatial scales are linked by hierarchical aggregation relationships, independent forecasts may violate aggregation coherence and affect the comparability of redistribution estimates. To address this issue, we introduce and compare several forecast reconciliation methods and select the empirical minimum trace (EMinT) method based on its forecasting performance. Using the reconciled mortality forecasts, we estimate future post-retirement remaining life expectancy across subnational areas and subsequently measure implicit pension redistribution. The results show that subnational longevity heterogeneity will persist throughout the forecast period, generating implicit pension redistribution with clear spatial clustering. Redistribution is substantially greater at the prefectural level than at the regional level, and the difference is projected to widen over time. These findings indicate that analyses conducted at more aggregated spatial scales may underestimate the true extent of pension redistribution across areas. This study provides quantitative evidence for the spatial evaluation of pension systems and public policymaking.

Keywords