Key decisions needed for longevity forecasts

Over the last century, life expectancy in the UK has increased significantly. But it is now widely acknowledged that, since 2011, population mortality improvements have slowed. The reasons behind this change are still being debated, with new causes potentially emerging, such as the impact of antimicrobial resistance. For the first time, the Institute and Faculty of Actuaries (IFoA) has joined forces with the Society of Actuaries (SOA) in the US and the Canadian Institute of Actuaries (CIA) on its latest Bulletin, ‘Longevity: Is the tide turning?’.

In recent years, the slowdown in the annual average rise in life expectancy seen in the UK has also been experienced in the US and Canada. This bulletin shows that it’s crucial the drivers of longevity are better understood in order to improve future longevity forecasts. We are now at a key decision point on how to treat these forecasts. They are, amongst other things, used by government in health and welfare policy decisions and by pensions funds and insurers in ensuring pension and annuity liabilities can be met.

Marjorie Ngwenya, IFoA President, said:

“It’s long been understood that the fall in death rates since World War II, which came as a result of improvements in medical, working and living conditions, could not be sustained indefinitely. But it is difficult to gauge whether the recent figures from 2011 onwards point to a blip or a substantial change in the trend.

“The drag on life expectancy can be attributed to a range of factors including flu epidemics, weather, data irregularities and environmental shock. Possible explanations also include an increase in deaths due to dementia and Alzheimer’s disease as more people reach advanced ages. But as this bulletin highlights, pinpointing the effect of one factor over another is extremely challenging.”

The bulletin examines recent research on the potential impact of austerity following the 2007/8 financial crisis on UK life expectancy. In contrast, the US response to the financial crisis was one of stimulus and spending.

Jeremy J Brown, President at the Society of Actuaries, said:

“It is important to explore life expectancy in a cross-border way. Overall, the US has experienced a slowdown in mortality improvement, and this research identifies both similarities and differences with the UK, as well as what drives them.”

Sharon Giffen, President at the Canadian Institute of Actuaries, said:

“It’s really valuable to examine similarities and differences experienced in these three countries. Unlike the US and UK, Canada is still seeing mortality improvements across all ages, although they have slowed significantly. One factor benefitting Canada is the healthy immigrant effect with around one-fifth of the population foreign-born. The lower mortality rates for immigrants are often attributed to the pre-entry medical and employment screening process.”

The IFoA’s first Longevity Bulletin was issued in 2011, and was created as an overview of longevity trends. ‘Longevity: Is the tide turning’ will be the tenth in the Bulletin series.

~ENDS~

Editorial notes

Download Longevity: Is the tide turning?

List of contributors to Longevity: Is the tide turning?

• Joseph Lu, Chair of the IFoA’s Mortality Research Steering Committee
• Chris Falkous, Biometric Research Actuary, RGA UK
• Hezhong Ma, VP & Actuary, RGA US Mortality Market
• Damien Lapointe Nguyen, Director, New products, RGA Canada
• Sandeepa Arora, Research Analyst, Nuffield Trust
• Nicola Oliver, Director, Medical Intelligence
• The Continuous Mortality Investigation

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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.

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