In “Unlocking mortality trends: a key to better outcomes” LCP illustrates the challenge that this disruption presents to traditional actuarial models used by the industry for forecasting mortality. The report stresses the importance for pension schemes of understanding the drivers of future mortality.
The CMI mortality projections model is commonly used by trustees and sponsors in the UK to manage their defined benefit pension schemes. LCP analysis of the behaviour of the latest CMI model, released just last week, shows that any plausible mortality outcome in 2024 leads to an inevitable fall in life expectancy, unless structural change is made to the model or even less weight is put on post-pandemic mortality data.
Key findings in the report include:
Despite the headline pressures on the NHS, mortality rates over the first few months of 2024 are in line with the best years on record.
Irrespective of mortality in 2024, a further fall in life expectancy next year is highly likely unless the structure of the CMI model is changed. The current approach looks increasingly problematic, and LCP expects modifications to next year’s model.
Actuarial views on life expectancy have swung significantly over the years. Over the last two decades typical assumptions for life expectancy at 65 first rose by 20%, before falling by 13%. The current trajectory is especially uncertain.
LCP anticipates an uptick in cancer deaths in the coming years due to ongoing delays in diagnosis and treatment.
If obesity drugs meet their early promise and gain widespread take-up, they could significantly improve the outlook for future longevity.
Chris Tavener, Partner and Head of Life Analytics at LCP commented: “The ramifications of the pandemic and the ongoing pressures on the healthcare system have significantly disrupted mortality trends. Relying solely on traditional actuarial methods to predict future mortality no longer works. This challenge is exemplified by the CMI’s mortality projections model, which is creaking, and we expect to see modifications next year.”
Stuart McDonald, Partner and Head of Longevity and Demographic Insights added: “Our new report analyses recent trends in causes of mortality, drawing on input from our multi-disciplinary team of actuaries, epidemiologists, clinicians and other health experts. Unlocking mortality trends enables more informed decisions, which is the key to better outcomes for members, trustees and sponsors of defined benefit pension schemes.
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