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The Actuary The magazine of the Institute & Faculty of Actuaries

CMI publishes 'early' update to mortality projections model

The CMI committee has changed its process of working with the population data published by the Office for National Statistics (ONS) to bring forward the usual November release date [The Actuary, 5 Aug].

Any loss of accuracy from the approach is expected to be minimal and to be considerably outweighed by the benefits of releasing the model earlier.

The CMI has published Working Paper 55 to accompany the model release and a CMI_2011 user guide can be found here.

The CMI says that the default initial rates of mortality improvement are higher than those published in CMI_2010 at the youngest and oldest ages, for both males and females, but the comparison is more complex between ages 40 and 90 with estimates higher at some ages and lower at others.

Accordingly core projections generated by the CMI_2011 model produce expectations of life which are generally slightly lower than those produced by CMI_2010 (with other parameters held constant) for males, and slightly higher for females.

Commenting on the release, Tim Gordon, head of longevity at Aon Hewitt, said: "The latest CMI projections are a positive step forward for the pensions industry, as perhaps for the first time in the past 20 years, the overall impact of a new standard mortality table on typical pension plan liabilities is small - it is expected to reduce the liabilities of a typical pension plan by less than 0.2%.

"The industry has been calling for stable yearly mortality projections for some time, in order to reduce unexpected jumps in scheme liabilities. Although it's still early days for what is a long-term model, the CMI appears to have successfully achieved this.

"It is also encouraging that the CMI has published the new tables three months earlier than usual, as this will help pension plan sponsors and trustees who want to budget for future costs using the latest information."

The CMI is organised by the Actuarial Profession in the UK for the purpose of analysing mortality data from life assurance and pensions and producing standard actuarial mortality tables.