Why life expectancy figures don’t always tell the whole story

This is one of the key messages from Issue 02 of the Institute and Faculty of Actuaries’ Longevity Bulletin, published today.

Alison O’Connell, editor of the Bulletin, argues that period life expectancy, quoted in media reports as the average number of additional years a person can be expected to live for, is not realistic as it assumes mortality rates are frozen to that time period. Period life expectancy does not take into account likely future mortality changes, needed to produce a realistic picture of future lifespans. Instead, cohort life expectancy, increasingly used by actuaries, demographers and policy makers, does make an allowance for how mortality is expected to change in future.

Alison said: “ A period life expectancy at birth for women of 82 years gives us a summary of average mortality for the UK at the current time to be compared with that for men of 78 years, for example, or with mortality levels in other countries. More useful to answer the question "How long can we be expected to live?" is cohort life expectancy. This is regularly updated with projections of what future mortality levels might be. This tells us that women born now are estimated to live on average for over 92 years, and men for nearly 90 years. 

"I have collected many examples of mistaken commentary using period life expectancy figures as if they forecast future lifespans. But to use them this way means we underestimate lifespans, and underestimate how fast lifespans have been improving in recent decades.

“So, the next time you see an article talking about life expectancy, make sure you understand whether the number really does give a lifespan you can expect.”

ENDS

A copy of the Bulletin can be found here.

Enquiries: Tel. Michael Scanlan on 020 7632 1453 or email michael.scanlan@actuaries.org.uk

Notes to editors:

1. 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.
2. Members of the Profession 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.
3. The Profession is 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 the Profession in society.
4. The Profession is available to provide expert comment to the media on a range of actuarial- related issues, including enterprise risk management, finance and investment, general insurance, health and care, life assurance, mortality, and pensions.