CMI confirms reversal in longevity trend

The projected life expectancy of 25-year-olds has fallen for the second consecutive year, with males expected to live 18 months less long than projected two years ago and females expected to die almost two years earlier, new statistics show.

The 2016 Continuous Mortality Investigation (CMI) mortality projections shows a male age 25 can expect a further 63.744 years of life, down from 65.259 in the 2014 tables. A female 25-year-old is now predicted to expect 65.501 years, compared to 67.43 years in the 2014 tables.

The second year of falls indicates that last year’s falls were not a blip, and show a significant change in longevity trends. While life expectancies are still increasing for younger ages, the rate of increase is less than previously projected. In the 2016 modela a 25-year-old female has a life expectancy from birth to death of 90.501, compared to a 35-year-old who would live to 89.596 or a 45-year-old living to 88.950.

Longevity projections have been scaled back across all age cohorts, with 65-year-old males now projected to live almost six months less than expected, down from 22.803 years in the 2014 tables to 22.224 years in the most recent data set. Projections of longevity of female 65-year-olds have been scaled back by 10 months, from 24.929 years to 24.094 years.

Female 85-year-olds are expected to live almost 6 months less long than was projected two years ago.

The reversal of the trend in ageing challenges the logic of state pension reforms that propose raising the state pension age. Last week a report by John Cridland proposed workers under 45 wait until they are 68 for state pension, while a DWP document suggested those under 30 may not have access to theirs until they reach 70.

Aon says the underlying picture for pension schemes is more complex. Its Aon Hewitt Longevity Model (AHLM) dataset supports additional analysis carried out by the CMI, which indicates that recent mortality improvements for pension scheme members have differed from the national population.

Aon Hewitt partner and head of longevity Tim Gordon says: “It is increasingly difficult to argue that the fall off in national mortality improvements since 2011 is simply a blip. However, the underlying picture for pension schemes is complex and, accordingly, a more-tempered view is appropriate. In particular – and perhaps surprisingly – less-well-off DB scheme pensioners appear to have had higher recent mortality improvement than both the national population and better-off defined benefit scheme pensioners.

“The emerging mortality data means that the pension scheme longevity market itself is in a state of flux. With changing or incomplete data, there remains a risk that schemes considering hedging their longevity risk may end up with poor pricing, or make a decision based on out-of-date information. We are continuing to work with schemes, insurers and reinsurers to build a wider consensus on future mortality improvements and to ensure fair and efficient pricing in the longevity market.”