Life expectancy assumptions at 65 have fallen by around seven months for men and six months for women, according to the latest update from the Continuous Mortality Investigation (CMI).

Commenting on the latest update, WTW senior mortality consultant, Stephen Caine, noted that mortality in the UK has continued to run at a high level, not yet returning to the pre-pandemic level.

However, Caine noted that while Covid sadly remains responsible for hundreds of deaths each week, there have been a similar number of above-average deaths from non-Covid causes for a variety of reasons, particularly over the last 12 months.

"Age-standardised mortality rates in 2022 were 6 per cent higher than in 2019 and the CMI estimates that there have already been 25,000 more deaths this year than would have been expected if mortality rates had been in line with pre-pandemic levels in 2019 (year up to 9 June)," he continued.

The CMI's revised estimates could have a range of implications for defined benefit (DB) pension schemes, as Caine pointed out that the CMI’s model is used by most DB pension schemes when making assumptions about how mortality rates will change in future.

"For DB pension schemes, this could be the first time that trustees and sponsors feel they have sufficient evidence to reflect recent trends in their life expectancy assumptions," he said, continuing: "Indeed, any scheme that routinely adopts the most recent CMI model will automatically see this happen.

“This could reduce DB pension scheme liabilities by 2-3 per cent relative to the most recent valuation and could reduce total private sector DB pension scheme liabilities by £20bn or more, accentuating the recent improvement in schemes’ financial positions from economic factors.

“It will have implications across strategic matters such as funding, investment and intentions for addressing longevity risk, as well as for day-to-day matters such as the terms for member options – for example, transfer values and commutation.

"In particular, for those looking towards the insurance market, schemes may find recent trends are already priced in, to some extent, but there may be room for further reductions to come.”

The CMI’s annual mortality improvement projection model also included data from 2022 for the first time, although the CMI placed a 25 per cent weight on this data, suggesting that placing full weight on 2022 data would lead to falls in projected life expectancy that most users of the model would consider to be excessive.

Caine highlighted this decision as evidence that the CMI believes the 2022 experience doesn’t yet reflect a new normal and instead expects the reduction in lifespan for pension scheme members from recent trends to be more modest.

“This continues a trend seen since over the last decade, where stalling longevity improvements in the UK from a variety of causes have seen pension scheme member life expectancy drop by around two years in total relative to the 2012 model," he added.

“This has been accentuated by the 2021 census which revealed fewer people than expected in many age groups, implying mortality rates had actually been higher than expected over the past decade – a step change which is incorporated in the CMI_2022 model and accounts for one month of the life expectancy drop alone.

"Overall, CMI_2022 gives the lowest projected lifespans since the first version of the model was developed in 2009."

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