Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • May 2012
05

Schemes 'must address mortality variation within sectors'

Open-access content Tuesday 29th May 2012

Smaller pension schemes have been urged to review their mortality data after new actuarial research highlighted the wide variation of mortality experience within, as well as between, industry sectors.

2

A paper published earlier this month by the Institute and Faculty of Actuaries' Continuous Mortality Investigation found that overall mortality rates in the financial sector were around 20% less than the rates calculated by schemes in basic industries such as mining and paper.

But within the financial sector itself, members receiving pensions of less than £1,500 a year were almost twice as likely to die earlier than pensioners receiving over £25,000 a year.

According to Mercer, this suggests that working in the same industry could be less relevant to life expectancy than the level of pension received, which is likely to indicate the socio-economic group an individual belongs to.

Mortality rates are important to pension schemes, because the longer people are expected to live, the longer pension payments are likely to have to be made. This means schemes have to hold more assets to cover these payments.

Glyn Bradley, associate at Mercer, said mortality assessments had found it was not unusual for senior managerial employees to live two to three years longer than employees with more routine work in the same company.

'This means that these pension schemes need to hold about 10% more assets, per pound of pension being paid to the retired higher-paid workers, relative to the amount they need to hold to provide a lower-paid worker's pension.'

According to Mr Bradley, these disparities within schemes are likely to be linked to higher-paid workers having healthier lifestyles. 'These are very broad generalisations but in short: working with your hands won't kill you, but the booze and fags might,' he said.

Schemes should use modern actuarial techniques to set scheme-specific mortality assumptions, he said, making use of postcode profiling and more sophisticated modelling that was once the preserve of large insurers.

This article appeared in our May 2012 issue of The Actuary.
Click here to view this issue
Filed in
05
Topics
Pensions

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Pensions Actuarial Analyst

London, Midlands, Scotland
£Market Competitive
Reference
143788

Senior Manager/Director level roles - Life insurance

Stirling
Generous salary with excellent bonus and benefits
Reference
143787

Reinsurance Pricing Actuary

London (Central)
£60-90K depending on experience
Reference
143786
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ