LONDON (28 March 2017) – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), has said that the newly released Continuous Mortality Investigation’s (CMI) mortality projections model, CMI_2016, supports the view that the recent national reduction in mortality improvements can no longer be considered a ‘blip’.
The new CMI model, based on data to the end of 2016, incorporates the lower-than-previously-expected mortality improvements over the past five years into its future projections. Aon Hewitt’s analysis of data from the first two months of 2017, which is not included in CMI_2016, also supports the view that the reduction in national mortality improvements shows no sign of recovering to previous levels.
The underlying picture for pension schemes is more complex. Aon’s analysis of its Aon Hewitt Longevity Model (AHLM) dataset (which is used widely to advise pension schemes, insurers and reinsurers on longevity assumptions) supports additional analysis carried out by the CMI, which indicates that recent mortality improvements for pension scheme members have differed from the national population.
Tim Gordon, partner and Head of Longevity at Aon Hewitt, said:
“It is increasingly difficult to argue that the fall off in national mortality improvements since 2011 is simply a blip. However, the underlying picture for pension schemes is complex and, accordingly, a more-tempered view is appropriate. In particular – and perhaps surprisingly – less-well-off defined benefit scheme pensioners appear to have had higher recent mortality improvement than both the national population and better-off defined benefit scheme pensioners.”
Tim Gordon continued:
“The emerging mortality data means that the pension scheme longevity market itself is in a state of flux. With changing or incomplete data, there remains a risk that schemes considering hedging their longevity risk may end up with poor pricing, or make a decision based on out-of-date information. We are continuing to work with schemes, insurers and reinsurers to build a wider consensus on future mortality improvements and to ensure fair and efficient pricing in the longevity market.”
For further information please contact:
Colin Mayes Marina Jane-Sanchez
Aon Hewitt CNC
01372 733689 020 3219 8811
Notes to Editors
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