Chapter 9: Lifetime mortgages: product disclosure
Notes provided by the CMI to assist the calculation of life expectations required under MCOB 9.4.6R(5)
The FSA’s Conduct of Business sourcebook for mortgages (MCOB) came into force on 31 October 2004. Amongst other things, this sets out, in Chapter 9, the rules relating to product disclosure for lifetime mortgages (also known as equity release schemes), including benefit illustrations.
We are receiving a number of requests for information regarding the mortality tables to be used in these illustrations for estimating the term of lifetime mortgages. This basis is described in Section 9.4.10 of MCOB. In particular, this refers to:
"PMA92(C=2010) and PFA92(C=2010) for males and females respectively,…"
These tables can be derived from the information in CMI Report 17, by applying the projection factors described in Section 6 to the PMA92Base and PFA92Base mortality rates set out in Appendix A5. (Tables projected to calendar year 2020 are given in Appendix A10, which can be used as a check on the method of calculation.)
The PMA92(C=2010) and PFA92(C=2010) tables were not published directly in CMI Report 17, but were published in a volume entitled "Standard Tables of Mortality: The "92" Series". This volume can be purchased from the eShop of the actuarial profession.
As a courtesy, the PMA92(C=2010) and PFA92(C=2010) tables are provided here as Excel spreadsheets, for free download.
This spreadsheet contains, for each age and sex, the mortality rates from the relevant table together with the CMI’s calculation of the complete expectation of life from that table. The CMI accepts no responsibility for the use of these tables and cannot enter into correspondence about them.
The users of this information should be aware that considerable uncertainty exists in any forecast of future mortality. At the moment it is not possible to quantify this uncertainty. The FSA has chosen to specify the above mortality tables for the purposes of MCOB 9.4. The CMI and the actuarial profession give no advice about the suitability of these tables for that or any other purpose. These tables are not the most up-to-date issued by the CMI for use by actuaries and, for example, do not take account of the latest research on the cohort effect.
It should also be borne in mind that mortality tables are, by their very nature, based on the average mortality experience of large populations. As such, they are extremely unlikely to predict the experience of an individual. Even if a mortality table turns out to be “correct” in aggregate, the resulting expectation of life will be too low for 50% (and too high for the other 50%) of all individuals.
You might also like
If you have any questions about the CMI please email
Filter or search events
Louise Pryor, IFoA President, will chair this free-to-view session, in which Alex Darsley, TPR, Actuarial Regulatory Policy, will be discussing the regulator’s Climate Change Guidance Consultation, which is seeking views on new guidance designed to help trustees meet tougher standards of governance in relation to climate change ri
This session will examine the megatrends and themes driving the Future of Work across the Financial Services industry, and how Covid-19 has accelerated new future work priorities with a particular focus on hybrid work and leadership mindset and capabilities.
Internal audit is often the Cinderella of the audit world. It’s a regulatory requirement for insurance companies to have an internal audit function, so why not make it as useful as possible? This session will look at how to link an internal audit plan to the risk register, and how that helps audit committees and boards to spot problems and fix them.
Climate change is one of the greatest risks facing our world today. Addressing it will require multi-faceted solutions. Through this panel session, we will explore the different levers that can be used to meet net-zero targets including climate science and data, government engagement, and mobilising green finance.