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What next for mortality assumptions?
Author Stuart McDonald Posted on July 14, 2021 18:50
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I was flattered to be asked to be one of the Pension Playpen All Stars - thank you to Steve and Henry for the invitation!


As an actuary specialising in life and health risks (as well as policyholder behaviour) you can expect most of my future blogs to have a focus on pension scheme or general population mortality.


Over the last 18 months my focus has unsurprisingly been on the COVID-19 pandemic and its impact on our health and mortality. Last year I co-founded the COVID-19 Actuaries Response Group, which I continue to co-Chair.


Actuaries will spend many years poring over the various impacts of the pandemic on demographics. Just thinking about future mortality rates there are numerous competing factors we'll need to allow for.


There is a healthy survivor effect which arises from forward mortality displacement (sometimes rather brutally referred to as "harvesting"). If the more frail members of a population (or pension scheme) were lost to COVID in 2020/21 then the remaining population would be expected to be healthier, all else being equal.


Of course all else is not equal. Millions of us have been exposed to a virus, the long term effects of which are unknown. We already have between one and two million people self-reporting symptoms of "Long COVID". We cannot know how long such health issues will persist, or what other issues may arise in the future. Might we see a damaged generation? This was reported to be the case after the 1918/19 Spanish Flu pandemic, which was followed by decades of elevated cardiovascular deaths.


Meanwhile we have the effects of delays to NHS screenings and treatments. The backlogs may take years to clear. I have little patience with those claiming that such delays made a meaningful contribution to the elevated mortality we saw last year, or over the winter period. Unfortunately, this pain is still to come.


There is also the economy, which has a complicated relationship with life expectancy. Somewhat counterintuitively, studies have repeatedly shown that recessions can increase life expectancy in the short term. Longer term though a stronger economy should result in better life expectancy so long as political priorities give appropriate focus to health and social care. How the economy will respond and change in the years ahead is not easy to (reliably!) forecast.


Perhaps though, it is too early to focus on these longer term issues. We are facing a third wave of infections in the UK, with cases and now hospitalisations rising exponentially and a Government who are bullish about reopening on 19 July. There is significant uncertainty in the modelling presented recently to SAGE - while the best-case scenarios suggest few excess deaths compared to past waves, more pessimistic scenarios indicate than tens of thousands more COVID deaths are a very real possibility in the year ahead. We have had a hugely successful vaccine rollout, but significant proportion of the population is not yet fully vaccinated, and vaccines don't offer complete protection.


The COVID-19 Actuaries Response Group will continue to provide expert analysis and comment on our website Bulletins | COVID-19 Actuaries Response Group (covid-arg.com) and social media feeds. I will also blog here when I can - even if on occasion that is just a reposting or a link to something relevant there. Keep safe.