31 March 1999

Dear Appointed Actuary

As you may know, the Bureau introduced proposed new standard tables of mortality for permanent assurances and self employed retirement annuitants to the profession at a Staple Inn seminar on 7 December 1998 for discussion and consultation. The papers for that seminar are still available on the Institute and Faculty web site. These tables were based on the experience of the 1991-94 quadrennium. At the same time, proposed new projected mortality improvement factors were also presented. A standard table for life office pensioners, based on the same quadrennium, had previously been published in C.M.I.R. 16.

Most of the discussion at the Staple Inn seminar concerned the mortality improvement factors. Some speakers supported the Bureau's proposal while others, persuasively, pointed to the experience of recent years and suggested that a more rapid improvement in mortality should be assumed. Having considered these comments and the newly available sets of ratios of actual to expected deaths amongst life office pensioners for each calendar year from 1992 to 1997, the Bureau has decided to issue revised projection factors. These incorporate a more rapid improvement in mortality in the early years of the projection than was previously the case.

Details of these mortality improvement factors are enclosed with this memo.

Having considered the situation (and in particular the experience of the last 6 years) the Bureau now recommends that a single set of improvement factors be used for both males and females and for all experiences. It is recognised that this may overstate the future improvement in female rates. However, given that the female amounts pensioner experience looks odd and that it is difficult to know how much weight to give to it, the Bureau feels that its recommendation is reasonable.

Using the enclosed improvement factors and the base mortality table published in C.M.I.R. 16 the following 100A/Es are derived from the life office pensioner experience, for all ages.

Full details of the background to these factors will be published in C.M.I.R. 17 later this year and John McCutcheon will be describing this work at the CILA conference on 21 April.

A copy of this letter and its enclosure will be put on the Faculty and Institute Web site.

Yours sincerely

C. G. Kirkwood
Chairman of the Executive Committee of the CMIB