New pensionscheme mortality tables from the CMI
On 7th February 2014, the CMI published the new S2 mortality tables. This page shows some sample annuity factors illustrative of lifecompany annuities and definedbenefit pensions. We will use the socalled amounts tables, i.e. mortality as weighted by the size of the annual pension, as this gives a better indication of the financial importance.
Figures are calculated using approximate continuoustime values where appropriate. Note that these figures are for information only, and they are provided without warranty of any kind. The annuity factors tabulated here include no allowance for future improvements, and are thus unsuitable for inference about any lifecompany annuity reserves, or the funding level of any definedbenefit pension scheme.
If you want to calculate your own annuity factors on other bases, try our online calculators. Alternatively, if you want a bespoke rating for your scheme's socioeconomic mix, try mortalityrating.com. If your portfolio has credible experience data, you should consider Longevitas to analyse your experience data and create your own portfoliospecific mortality tables.
Changes in mortality rates
The new S2 tables show substantial falls in mortality rates at postretirement ages compared with the old S1 tables. Male mortality has improved the most.
Table 1. Mortality rates per 100,000 and cumulative improvements
 S1PA  S2PA  Improvement 
Age  Males  Females  Males  Females  Males  Females 
65  1124  794  934  710  17%  11% 
70  1973  1332  1628  1172  17%  12% 
75  3538  2437  2933  2123  17%  13% 
80  6263  4445  5308  3980  15%  10% 
85  10715  7815  9434  7368  12%  6% 
Changes in life expectancies
If mortality rates fall, then life expectancies rise. We can see here some substantial improvements in relative life expectancy, particularly for males.
Table 2. Life expectancies
 S1PA  S2PA  Increase 
Age  Males  Females  Males  Females  Males  Females 
65  18.1  20.6  19.2  21.2  6.2%  3.1% 
70  14.2  16.5  15.2  17.1  7.0%  3.4% 
75  10.8  12.8  11.6  13.2  7.5%  3.4% 
80  7.9  9.5  8.5  9.8  7.5%  2.8% 
85  5.6  6.8  6.0  6.9  6.4%  1.6% 
Note: These are the life expectancies at current rates, i.e. with no allowance for any likely future improvements in mortality and life expectancy. These figures should therefore be treated as minimums, and the factors will likely be higher if future improvements are included. If you want to calculate your own life expectancies on other bases, try our online calculators.
Changes for annuities
Many lifecompany annuities are level, i.e. the income does not change from year to year. The table below shows level annuity factors under the new S2 tables for males and females at selected ages, and compares them with the equivalent annuity factors under the old S1 tables.
Table 3. Annuity factors
 S1PA  S2PA  Increase 
Age  Males  Females  Males  Females  Males  Females 
65  13.42  14.83  14.08  15.20  4.9%  2.4% 
70  11.1  12.52  11.74  12.88  5.8%  2.8% 
75  8.84  10.17  9.41  10.48  6.5%  3.0% 
80  6.76  7.94  7.21  8.14  6.7%  2.6% 
85  4.99  5.95  5.28  6.04  5.9%  1.5% 
Note: Immediate level annuities paid continuously to single lives, discounted at 3.0% interest per annum. If you want to calculate your own annuity factors on other bases, try our online calculators.
Changes for definedbenefit pension schemes
Many definedbenefit pensions are at least partly inflationlinked, as are some lifecompany annuities, i.e. the income is increased from year to year. The table below shows factors for escalating annuities under the new S2 tables for males and females at selected ages, and compares them with the equivalent annuity factors under the old S1 tables.
As well as noting the same phenomenon of the greatest increases for males, we note that the increases tend to be larger still than the equivalent figures above for level annuities. This is because the impact of increasing longevity is felt more with a lower effective discount rate.
Table 4. Pension factors
 S1PA  S2PA  Increase 
Age  Males  Females  Males  Females  Males  Females 
65  16.27  18.34  17.20  18.86  5.8%  2.8% 
70  13.03  14.97  13.89  15.45  6.6%  3.2% 
75  10.06  11.78  10.78  12.17  7.2%  3.3% 
80  7.49  8.93  8.02  9.17  7.2%  2.7% 
85  5.39  6.51  5.73  6.62  6.2%  1.6% 
Note: Pensions in payment paid continuously to single lives, escalating at 2.0% per annum and discounted at 3.0% interest per annum. If you want to calculate your own annuity factors on other bases, try our online calculators.
