Mortality development in pensions – data basis models and results in UK and Germany

Mortality development in pensions – data basis models and results in UK and Germany

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Speaker(s): Richard Herrmann (Heubeck), Cathy Love Soper (Barnett Waddingham Actuaries and Consultants Limited)

Besides the discount rate longevity is the most important assumption for the value of pension obligations. Thus the actuary has to have a close look at the mortality rates and their future development. According to different valuation purposes and risk aspects the data base for the mortality rates may require different data bases and/or different approaches for projections may be necessary.

Furthermore the requirement for unisex mortality rates may intensify in pensions last but not least by European jurisdiction.

The paper gives an outline of the data bases used in United Kingdom and Germany and the methods applied to establish applicable mortality tables. This is complemented by a discussion of future changes of mortality rates and how to implement projection in the actuarial tables.

Besides the “standard” differentiation between male and female unisex tables already applied in pension e.g. for the calculation of transfer values according to local labour law requirements. Different approaches for deducing unisex tables are discusses and compared by the results for the valuation of pension plan obligations.

By this paper the actuary and interested people will get understanding of establishing mortality tables for pensions and the assumptions they are based on as well as the results for both countries in comparison.

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