On the go: The relatively low number of deaths reported so far this year appears to buck the trend of stalling life expectancy improvements since 2011, an LCP report has highlighted.
The consultancy’s 2019 longevity report, published on August 20, said emerging evidence from the Office for National Statistics shows there have been fewer deaths reported this year so far than in recent years.
Based on the low number of deaths reported in 2019, LCP expects the Continuous Mortality Investigation’s mortality projections model, which is set to be published in 2020, will produce slightly longer life expectancies. This could lead to increasing pension scheme liabilities.
A blog by Conor O’Reilly, head of analytics at Club Vita, published last week pointed at a similar conclusion.
Evidence of the slowdown in deaths in 2019 also came from the first 2019 quarterly update of one of Britain’s biggest undertakers, Dignity, which said that the “operating performance in the first quarter was below the board’s expectations as a result of the significantly lower than expected number of deaths”.
However, LCP said that it is too early to conclude whether figures for 2019 suggest "a jump start to the stalled improvements in life expectancies for the average person in England and Wales seen since 2011".
The average defined benefit pensioner has experienced higher rates of improvement than the general population in recent years with many schemes exposed to higher longevity risk in their pensioners than their non-pensioner members.
Chris Tavener, partner at LCP, said: “It is important to understand the demographics of your pension scheme members, such as their socio-economic class, in order to have an informed view of their life expectancy. With this in mind, trustees and sponsors should consider moving to the latest model for projections and fine-tune it so it is appropriate for their scheme.”
LCP’s report also showed that liabilities for a typical scheme might increase by 6-8 per cent if major developments in cancer treatments mean the proportion of deaths due to cancer are eradicated over the next 20 years.
Looking further into the future, the report noted that the advancement of wearable technology, directly linked via 5G to someone’s GP or even a bot with artificial intelligence, “could lead to quicker treatment and even prevention of illnesses”.
But optimism is tempered by the fact that 2018 had the highest number of deaths since 1999 in England and Wales, according to data published by the ONS. There have been an unusually high number of deaths with much of the country experiencing severe cold weather.
Furthermore, flu outbreaks and the record breaking summer heat could yet reverse the 2019 figures.
