The Finnish earnings-related pension system insures disability. Disability benefits are funded by contributions and collective buffers as well as by individual reserves. Reserves are calculated by z-model. This model has been used since the beginning of the Finnish pension system in 1962.
Z-model provides actuarial techniques for all life and pension insurances. However today Finnish pension system uses z-model mainly on occurred disability cases.
This paper presents new iteration method for data fitting. The method uses two disability types. Short disability type and long disabilitytype. This method modifies values of disability incidence parameters in order to turn actuarial profit into fixed value. Method also modifies values of parameters as to distribute fixed profit in terms of x and u as smoothly as possible.
This paper contains iteration calculations. Data is collected from Finnish pension insurance companies. As a result of calculations we have new values for z-parameters. Today the Finnish pension system uses values of z-parameterswhich were fitted into data decades ago. Those values do not work appropriately anymore. The calculations indicate that iteration method provides a new practice for fitting z-model into data quite easily.