Research from KPMG reveals that our predictions that our life expectancy is increasing and at what rate are wrong. Life expectancy assumptions have continued to decrease for the fourth consecutive year.
Analysis of United Kingdom defined benefit plan member mortality found that median life expectancy has fallen by 0.2 years for current pensioners, and 0.1 years for future pensioners.
The KPMG 2019 Pensions Accounting Survey found that a current pensioner aged 65 would live for an average of a further 21.9 years, but a future pensioner who was currently aged 45 would live a further 23.4 years from the age of 65.
The Continuous Mortality Investigation Bureau (CMIB) updates research every year, producing an annual report on the CMI projections. The last few years’ updates have showed a slowing rate of future mortality improvements. Assumed life expectancies have fallen.
KPMG is now anticipating a ‘lost decade’ of life expectancy improvements between 2009 and 2019. Defined benefit schemes rely on mortality assumptions, so changes can affect longevity risk.