CMI Model shows small drop in cohort life expectancy

The Continuous Mortality Investigation (CMI) has released the latest annual update to the CMI Mortality Projections Model, CMI_2021.

Standardised mortality rates in England & Wales in 2021 were on average 5% lower than in 2020. However, both years had significantly higher mortality than before the coronavirus pandemic. Mortality in 2021 was 8% higher than in 2019, and mortality in 2020 was 14% higher than in 2019.

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 and 2021 will affect actuarial calculations, mortality in both of these years has been exceptional and is unlikely to be indicative of future mortality. For this reason, the CMI places no weight on the data for 2020 and 2021 in the core version of the model.

CMI_2021 produces cohort life expectancies at age 65 that are about two weeks lower, for both males and females, than in the previous version of the CMI model, CMI_2020.

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

“While mortality can be volatile from year to year, we tend to see falls over time so it is unusual to see such a sustained increase in mortality. We have to go back to 1940-41 to find a period as unusual as 2020-2021 relative to the preceding five-year average.

“The impact of the coronavirus pandemic has meant that we have placed no weight on 2021 mortality experience. We did the same with the 2020 core model after a consultation process and users from the pensions and insurance industry expressed strong support for this temporary change. We encourage users to consider adjusting the model’s parameters to reflect their own portfolios and their views of the impact of the pandemic.”

For more information on the CMI Mortality Projections Model, CMI_2021, please see the FAQs.

From April 2020 to date, the CMI Mortality Projections Committee has produced a regular 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_2021 - Frequently asked questions. March 2022.
    
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.