“Life expectancy for a man aged 65 in 2020 has improved for the first time since the 2012 model; for women, this is the first improvement since the 2014 model.
“2019 saw a significant improvement in mortality rates, at least by recent standards, with the highest annual improvement for men and women combined since 2011. However, the effect on life expectancies in the CMI model are modest – increases at age 65 are under three weeks for men and around five weeks for women. This is because some improvements in 2019 were already anticipated – so you have to run to stand still – and because the smoothing of mortality improvements softens the effect of a single year’s data.
“This comes after a long period when each iteration of the CMI model brought lower life expectancies. As a result, defined benefit pension schemes undergoing valuations this year are still likely to assume that members live less long than was assumed when they last went through this process three years ago. The CMI’s analysis shows a difference of about eight months for a 65 year-old man, depending on precisely how improvement assumptions are calibrated.”
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