CMI Model shows modest fall in cohort life expectancy, after adjusting for exceptional 2020 mortality

The Continuous Mortality Investigation (CMI) has released the latest annual update to the CMI Mortality Projections Model, CMI_2020.

Mortality rates in England and Wales in 2020 were on average 12% higher than in 2019 because of the coronavirus pandemic. This is the largest year-on-year increase in mortality rates since 1929, and mortality rates in 2020 were the highest we’ve seen since 2008.

The CMI Model is used by UK pension schemes and insurance companies which need to make assumptions about future mortality rates. While mortality experience in 2020 will affect actuarial calculations, it is likely to be an outlier and not indicative of the future path that mortality rates will follow. For this reason, the core CMI_2020 model places no weight on the data for 2020 when projecting mortality rates into the future.

CMI_2020 produces cohort life expectancies at age 65 that are about four weeks lower for males and one week lower for females than in the previous version of the CMI Model, CMI_2019.

Cobus Daneel, Chair, CMI Mortality Projections Committee, said:

“The coronavirus pandemic has resulted in exceptional mortality in 2020, and we have seen the biggest year-on-year increase in mortality rates for over 90 years. We recognise that to see the full picture we need to consider deaths from all causes – not just those directly liked to COVID-19 – while allowing for a growing and ageing population. For this reason we are publishing weekly updates to our mortality monitor during the pandemic which focus on excess deaths relative to age-standardised mortality rates in 2019.

“The main purpose of the CMI Model is for pension schemes and insurance companies to make assumptions about future mortality rates. Our proposal to place no weight on 2020 mortality experience received strong support from these users, who view it as a sensible and pragmatic approach. Users can modify the Model to take account of data for 2020, fully or partially, if they choose.”

For more information on the CMI Mortality Projections Model, CMI_2020, please see the FAQs.

From April 2020 to date, the CMI Mortality Projections Committee has produced a weekly mortality monitor with a focus on ‘excess deaths’ during the pandemic.

~ENDS~

Contact
Sonia Sequeira, Media Relations Manager, IFoA
Tel: 07525 592 198
Email: sonia.sequeira@actuaries.org.uk

Notes to Editor

1. CMI Mortality Projections Model CMI_2020 - Frequently asked questions. March 2021.
    
2. Cohort life expectancy allows for assumed future changes in mortality rates. As future changes are unknown, it is a subjective measure. It is typically used by actuaries who need to use realistic assumptions about the lifespan of pension scheme members or insurance company policyholders. In contrast, period life expectancy only allows for changes in mortality rates to date and makes no allowance for future changes. It is an objective measure that is often reported by the Office for National Statistics.
    
3. The CMI Mortality Projections Model (the “CMI Model”) was introduced in 2009 to replace previous projections and has been updated on a broadly annual basis since then. It is based on mortality data for the population of England & Wales, published by the Office for National Statistics.
    
4. The CMI Model is typically used by UK pension schemes and insurance companies which need to make assumptions about future mortality rates. The Model does not provide an assumption around long-term mortality improvements, requiring users to make their own assessment.
    
5. Life expectancy for different groups, such as particular pension schemes and groups of policyholders, can vary considerably, and the CMI encourages users of the CMI Model to make appropriate assumptions for the purpose that it is being used for.

About the Continuous Mortality Investigation

Continuous Mortality Investigation Limited (‘the CMI’) is wholly owned by the Institute and Faculty of Actuaries but has an independent executive and management.

The CMI’s mission is to produce high-quality impartial analysis, standard tables and models of mortality and morbidity for long-term insurance products and pension scheme liabilities on behalf of subscribers and, in doing so, to further actuarial understanding.

About the Institute and Faculty of Actuaries

The Institute and Faculty of Actuaries (IFoA) is a royal chartered, not-for-profit, professional body.

Research undertaken by the IFoA is not commercial.  As a learned society, research helps us to fulfil our royal charter requirements to further actuarial science and serve the public interest. 

Actuaries provide commercial, financial and prudential advice on the management of a business’s assets and liabilities, especially where long term management and planning are critical to the success of any business venture. They also advise individuals, and advise on social and public interest issues.

Members of the IFoA have a statutory role in the supervision of pension funds and life insurance companies. They also have a statutory role to provide actuarial opinions for managing agents at Lloyd’s of London.

Members are governed by the Institute and Faculty of Actuaries. A rigorous examination system is supported by a programme of continuing professional development and a professional code of conduct supports high standards reflecting the significant role of actuaries in society.

The IFoA is available to provide independent expert comment to the media on a range of actuarial-related issues, including COVID-19 and its long term consequences, mortality, pensions, life and general insurance, health and care, finance and investment, climate change and sustainability, systems thinking, uncertainty and judgement, and risk management.