A new version of the mortality projection model used by most pension scheme trustees and sponsors has been unveiled for consultation.
The Continuous Mortality Investigation’s (CMI) Working Paper 168 focuses on how to respond to the high mortality rates in England and Wales last year. According to the Office for National Statistics (ONS), 49,339 deaths were registered in England last December – 13.5% higher than the December five-year average covering 2016-19 and 2021 (excluding the pandemic). A total of 3,432 deaths were registered in Wales, which was 16.3% above the December average. Using provisional monthly data, the ONS said that deaths in England and Wales were 6.3% and 5% above average respectively in 2022.
The CMI said that 2022 mortality “may be indicative of future mortality to some extent”, unlike the exceptional mortality seen in 2020 and 2021 during the peak of the pandemic. The consultation proposes to give 25% weight to 2022 mortality data. The CMI also plans to steadily increase the weight on mortality data until around 2025, by which time it expects a clearer indication of future trends.
“If these proposals go ahead then life expectancy assumptions at age 65 are likely to fall by around six months, equivalent to 2%, when adopting the new core model, all else being equal,” said LCP partner and head of life analytics Chris Tavener. “This is a larger fall in life expectancies compared to recent model updates, but we share the concern expressed by the CMI that higher death rates seen in the latter part of 2022, and continuing into January, may be indicative of future mortality.”
The CMI also intends to update the model to include latest population estimates based on the 2021 census. It expects to release the updated version in June.