Reduced mortality improvements driven by ‘persistent influences’ – CMI Committee

The reduction to the rate at which life expectancy is increased is driven by “persistent influences’ rather than short-term events such as the 2015 influenza outbreak, the Continuous Mortality Investigation (CMI) Mortality Projections Committee has said.

The comments come as the Institute and Faculty of Actuaries’ CMI released its latest mortality projections model. Analysis that shows over the last six years, since 2011, mortality improvements were 0.5 per cent per year for males and 0.1 per cent for females.

The CMI Mortality Projections Committee said these are both significantly lower than for any other recent six-year period. Therefore, it provides further evidence in favour of a change in trend, and suggests that the lower level of recent improvements is likely to be due to more persistent influences, rather than very short term events such as the early 2015 influenza outbreak.

In addition, the lower mortality improvements are reflected in lower life expectancies than in all previous versions of the CMI model. The 2017 model shows that life expectancies for individuals aged 65 at the start of 2018 are around 2 months lower, for both males and females, compared with the 2016 version.

Commenting, CMI Mortality Projections Committee chair Tim Gordon said: “There is much debate about the causes of the slowdown in mortality improvements, whether the low improvements will persist, and for how long. However, there is general agreement in the industry that the numbers are now reflecting a trend as opposed to a blip. Overall, mortality is expected to continue to improve, but the model suggests this is likely to be at a slower rate in the next few years than in the first decade of this century”.

“Our model aims to take a measured path and seeks to be neither over- nor under-responsive to emerging data. It is the standard model used by the insurance and pensions industries, providing an authoritative and independent overview. The model is designed to allow users to come to their own conclusions on improvements and plan appropriate financial reserves to meet their liabilities and commitments.”

The current CMI mortality projections model was introduced in 2009 to replace previous projections, and has been updated on a broadly annual basis since then. It is based on mortality data for the population of England & Wales, published by the Office for National Statistics.

Commenting on the projections, LCP partner Charlie Finch said: “The question the industry has been asking is will the trend of reduced mortality improvements continue, or is this just a hiatus for a few years? The evidence in favour of a sustained trend continues to grow. Trustees and sponsors need to consider how this new mortality data applies in the context of their specific membership. They may also wish to consider locking-in some of the gains from lower life expectancies through a buy-in or longevity swap, where the pricing has reduced considerably over the past 12 months on the back of the emerging trend.”

In addition, the Trades Union Congress has called for a halt to the state pension age. TUC general secretary Frances O'Grady said: “The government must not ignore these findings. Hiking the state pension age would be a big mistake. Life expectancy for women on low incomes is falling, as the gap between rich and poor grows. Forcing people to wait longer for their pension will punish those who have least.”

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