Articles - AI and pensions affecting life expectancy

 By Adam Boyes, Head of Trustee Consulting, Stephen Caine, Senior Mortality Consultant and Alison Fisher, Director, Retirement at WTW

 With such significant progress and some of the more obvious gains in hindsight having been made (e.g. reduction in smoking prevalence), it is less clear what will drive significant further extensions in life expectancy. Furthermore, the NHS currently faces several significant challenges that appear to present a headwind to further gains.

 In theory, the application of AI has the potential to bring about significant positive change in a great number of health-related areas that could lead to improvements in life expectancy.

 Where could AI have an impact on lifespan?
 Click on the sections below to explore some areas where AI may affect lifespan.

 The latest model for improvements in mortality rates would see life expectancy for a 65-year-old increase from around 23 years to around 30 years over the next 100 years. If we really saw that much medical progress in a decade, then the resulting 7-year increase to life expectancy over the decade could lead to a jump of c. 25% in the value of the liabilities of a 'typical' DB scheme. While such an extreme outcome might be theoretically possible, this would seem to require everything to go in the right direction rapidly and so perhaps in practice a smaller improvement is more probable.

 And what is plausible in practice?
 Ascertaining what might happen in practice is fiendishly difficult and speculative. Additionally, improvements in areas might overlap, counteract or be offset in another area. Therefore, any estimates need to be taken with an unhealthy dose of salt. Nevertheless, the table below provides some high-level subjective illustrations of potential population-wide life expectancy increases, with a focus on scenarios in each area touched on above that could play out in the next decade.

 
 * Please note that these crude illustrations do not provide a view about the likelihood of such changes materialising nor cover all scenarios that could arise.

 These plausible scenarios for the potential impact of AI show that, over the next decade, life expectancy improvements in the region of a couple of years of life expectancy are feasible, which could translate into an increase in the value of typical DB liabilities in the ballpark of 10%.

 We are, of course, unlikely to see one-way traffic and AI could also present downsides to life expectancy prospects such as through job displacement, increases in sedentary lifestyles and exacerbated health inequalities. Additionally (though beyond the scope of this article), there are many factors, positive and negative, that will influence life expectancy beyond what is achieved through the application of AI.

 So, what does all this mean?
 In the light of the many areas where AI could have a positive impact on human lifespan and acknowledging the considerable momentum behind current investments in AI, it is hard not to be optimistic about the role AI might play in improving population-wide life expectancy and the nation's health over the next decade. Whether advancements are equivalent to a century's progress in a decade or just a substantial improvement, the potential benefits could well be significant.

 Those in the pensions industry should keep a watching brief on developments in this area and consider carrying out scenario analysis to understand the potential risks for their schemes and appropriate risk-mitigation strategies.