New SAPS mortality tables from the CMIB
On 31st October 2008 the CMIB published the new SAPS S1 mortality tables based on the mortality of definedbenefit pension schemes. These tables follow the previous release of the '00 Series' mortality tables based on the mortality of lifeoffice pensioners. 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 the S1PMA and S1PFA tables, with comparison to the previous PCA00 lifeoffice tables. Life expectancies and annuity factors are approximate continuoustime values. 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 is large and has credible experience data, consider Longevitas.
Changes in mortality rates
The S1 tables show slightly higher mortality rates at postretirement ages compared with the PCA00 tables, despite the SAPS data being more recent. This is likely due to the different socioeconomic mix in the two data sets, with the SAPS data having a slightly greater weighting towards lowerstatus lives. The subject of allowing for socioeconomic mix is discussed in detail in our paper on using postcodes.
Table 1. Mortality rates per 100,000 and relative difference
 00 Series  S1 Series  Difference 
Age  Males  Females  Males  Females  Males  Females 
65  1087  682  1124  794  3%  16% 
70  1852  1277  1973  1332  7%  4% 
75  3387  2419  3538  2437  4%  1% 
80  6136  4403  6263  4445  2%  1% 
85  10485  7659  10715  7815  2%  2% 
Changes in life expectancies
If mortality rates change, then life expectancies do too. We can see here some small reductions in relative life expectancy.
Table 2. Life expectancies
 00 Series  S1 Series  Difference 
Age  Males  Females  Males  Females  Males  Females 
65  18.4  20.9  18.1  20.6  2%  1% 
70  14.5  16.7  14.2  16.5  2%  1% 
75  11.0  12.9  10.8  12.8  2%  1% 
80  8.1  9.7  7.9  9.5  3%  2% 
85  5.9  7.0  5.6  6.8  4%  3% 
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 likely figures will 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 S1 Series tables for males and females at selected ages, and compares them with the equivalent annuity factors under the PCA00 tables.
Table 3. Annuity factors
 00 Series  S1 Series  Difference 
Age  Males  Females  Males  Females  Males  Females 
65  11.44  12.40  11.32  12.31  1%  1% 
70  9.75  10.74  9.61  10.68  1%  1% 
75  7.96  8.97  7.85  8.91  1%  1% 
80  6.26  7.22  6.15  7.13  2%  1% 
85  4.79  5.59  4.64  5.47  3%  2% 
Note: Immediate level annuities paid continuously to single lives, discounted at 5.0% 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 escalating annuity factors under the new S1 tables for males and females at selected ages, and compares them with the equivalent annuity factors under the 00 tables.
As well as noting the same phenomenon of the greatest change for older males, we note that the changes tend to be larger than the equivalent figures above for level annuities. This is because the impact of increasing longevity is felt more with a lower effective interest rate (i.e. actual interest rate minus the escalation rate).
Table 4. Pension factors
 00 Series  S1 Series  Difference 
Age  Males  Females  Males  Females  Males  Females 
65  14.25  15.75  14.05  15.60  1%  1% 
70  11.73  13.17  11.54  13.07  2%  1% 
75  9.28  10.64  9.12  10.54  2%  1% 
80  7.08  8.29  6.93  8.17  2%  1% 
85  5.28  6.23  5.08  6.08  4%  2% 
Note: Pensions in payment paid continuously to single lives, escalating at 2.5% per annum and discounted at 5.0% interest per annum. If you want to calculate your own annuity factors on other bases, try our online calculators.
