John Bull is unwell – do not wish him an early grave.

I was annoyed when I read the following article from WTW.. It conflates corporate finance with personal misery in a most unpleasant way. John Bull, seen above scratching his head over such financials – is looking a little queasy – so am I.

Willis Towers Watson insight is that

…latest data from the ONS suggests UK mortality rates in 2022 were almost 5% higher than 2019, in spite of a significant drop in COVID-related deaths compared with the previous two years.

This could lead to significant reductions in life expectancy, and DB pension scheme liabilities, when the next iteration of the CMI mortality improvements model is published later this year.

My insight is this, life expectancy for those who have died in 2022 is zero and the expectancy for those living in 2023 is reduced because we now have data saying that excess deaths are not directly pandemic related but the direct result of people living shorter than expected.

Life expectancy does not reduce because the CMI mortality tables have been adjusted, it reduces because people we know and love die sooner than expected. Each week of the year in 2022 , the Covid 19 actuaries brought us news on “excess deaths”, in the early months the news was good, 2022 looked like being a healthy year, but as the year wore on, the news got worse.

The last week in December was one of the worst of the year..

The same profession that brought us the “good news” of rising interest rates, is now bringing us further good news of “excess deaths” which will enable actuaries to reshape the liabilities of our pension schemes making them look even more solvent.

This may be good news for bean-counters but is bad news for pensioners. I was angry enough to post to linked in

Surely you don’t have to wait till the CMI publish the next iteration of its model. Isn’t the evidence in your own data and the experience of UK pension schemes you advise and administer? We get weekly updates from the ONS and CMI – mortality is a matter of public interest, our life expectancy something that those of us who are in DC pensions have to consider for ourselves! We are all our own actuarial consultants, investment consultants and pension managers!

The clue is in the full title of the actuary’s CMI – it’s a continuous mortality investigation. We are continuously aware of death for “in life we are in death” – we know we are sickening.

The Times picked up on the ONS numbers and this is today’s headline

and the Times aren’t slow to point a finger

Fifty thousand more people died last year than normal, with NHS delays blamed for one of the most deadly 12 months on record…..

There were 1,600 more deaths than usual during Christmas week as long waits for ambulances, cold weather and surging flu infections increased mortality rates by a fifth.

The 50,000 excess deaths is at variance with the 31,000 estimated by the CMI. The reason is as Stuart McDonald reminds us

Comparisons of death counts can be distorted by population growth and ageing. The best way to compare deaths during the pandemic to prior years is to use age-standardised death rates. The CMI Mortality Monitor takes this approach.

The  greatest numbers of deaths were among female pensioners over 85

Now actuaries will have to decide if these excess deaths are a freak of the times or a permanent fixture.

As the Willis Towers Watson article concludes, the CMI are likely to declare an actuarial fudge

Coupled with the impact of the population estimate restatements arising from the 2021 census, the reduction from the 2022 CMI model could be as much as 4% or 10 months, giving rise to significant funding level improvements of a similar magnitude. However, this depends on the view taken on the future path of longevity and whether 2022 is seen as indicative of the path for future UK mortality. The CMI may dampen the impact from the new data by adjusting the model and a more realistic prediction may be to expect a life expectancy reduction of around 2%.

Those who are fortunate enough to have an occupational pension (rather than a pension pot) are likely to live more longer by dint of better financial wellbeing and because they’ve probably had a cushier life. Bean-counters should temper their enthusiasm.

The CMI do a great job of helping actuaries measure scheme liabilities (where scheme specific data is not enough). But they do not tell us the reasons for changes in mortality expectations. For that we need to turn to the deeper analysis from the Covid-19 actuarial team, here is Stuart commenting in the Times on the implications of this chart

Although 2020 and 2021 brought higher excess death totals as the pandemic hit, excess deaths last year were predominantly not driven by Covid. Stuart McDonald, a partner at Continued LCP analytics who works on the Faculty of Actuaries’ Continuous Mortality Investigation, said that even looking at figures adjusted for age, 1963 was the last time deaths had jumped so much above the rate three years earlier.

“Had we not just had two years of very extreme mortality, 2022 would really stand out,” he said, adding that it was most unusual for there to be month after month of high deaths. “At the start of the year we were seeing fewer deaths among older people because a lot of those people had frankly already died [of Covid], but it was clear even then that we were seeing higher deaths among younger people. Since the spring and beyond we’ve had fairly consistently high levels at all ages”.

Deaths increasing at all ages is not good news.

The WTW story , which is being placed on our social media timelines , is not a good news story , it suggests that pensions will be paid out for shorter as we will live for shorter. Only the most myopic of actuaries can sell that as good news.

At a time when many of us are scared, the actuarial profession has a duty of care to all. John Bull is unwell, we should be praying for a remedy, not delighting in his imminent demise.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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