Presentation Slides - Mortality Projections of Public Pension Plans in Canada and its financial implications

Document Properties

  • Type of Publication: Presentation
  • Subject: Mortality Projections of Public Pension Plans in Canada and its financial implications
  • Date: 2014-01-10
  • Speaker: Jean-Claude Ménard, Chief Actuary

Presentation Outline

  • Historical trends in Canadian mortality
    • Mortality by population characteristics
  • Mortality Projections Results
  • Uncertainty of Results
  • Can We Live Beyond 100 Years?

Page: 1


Life Expectancy at Birth (Calendar)

Source : Canadian human Mortality Database, University of Montreal

Page: 2


Contribution to increase in life expectancy at birth has gradually shifted to people over age 65

Source: Canadian human Mortality Database, University of Montreal and Office of the Chief Actuary calculations.

Page: 3


Improvements in mortality related to heart diseases have been significant over the last 15 years

Source: Data from Statistics Canada, Health Division and OCA Calculations Standardized Using 2001 Canadian Population

Page: 4


Life Expectancy at Age 65 (Calendar)

Source : Canadian human Mortality Database, University of Montreal

Page: 5


Life expectancy is impacted by marital status and level of income

Source: Office of the Chief Actuary, Actuarial Study No. 11: Old Age Security Program Mortality Experience, July 2012

Page: 6


Survivor beneficiaries mortality is significantly higher than that of general population

Page: 7


Mortality of Disability Beneficiaries is 5 to 6 times higher than the general population’s mortality (Ages 55 to 59)

Source: Office of the Chief Actuary, Actuarial Study No. 9: CPP Experience Study of Disability Beneficiaries, September 2011

Page: 8


Heat map of historical and projected mortality improvement rates for males

Page: 9


Heat map of historical and projected mortality improvement rates for females

Page: 10


Canadian mortality rates at ages 15 to 54 are significantly lower than US rates

Source: Canada : Office of the Chief Actuary, 26th CPP Actuarial Report and Statistics Canada catalogue 84-215-x
U.S. : 2012 OASDI Trustees Report and U.S. National Vital Statistics Report, Volume 60 No.3
All rates are standardized using the 2012 Canadian population

Page: 11


Mortality Rates for older age groups have decreased over the last 80 years, more so over the last 40 years for males

Source: Canada : Office of the Chief Actuary, 26th CPP Actuarial Report and Statistics Canada catalogue 84-215-x
U.S. : 2012 OASDI Trustees Report and U.S. National Vital Statistics Report, Volume 60 No.3
All rates are standardized using the 2012 Canadian population

Page: 12


For ages 65 to 74, 7 deaths per 1,000 are from cancer, while only 3 deaths per 1,000 are from heart diseases

Source: Canada : Office of the Chief Actuary, 26th CPP Actuarial Report and Statistics Canada catalogue 84-215-x
U.S. : 2012 OASDI Trustees Report and U.S. National Vital Statistics Report, Volume 60 No.3
All rates are standardized using the 2012 Canadian population

Page: 13


Male mortality rates for ages 75 to 84 for Canada are projected to become lower than US female mortality rates

Source: Canada : Office of the Chief Actuary, 26th CPP Actuarial Report and Statistics Canada catalogue 84-215-x
U.S. : 2012 OASDI Trustees Report and U.S. National Vital Statistics Report, Volume 60 No.3
All rates are standardized using the 2012 Canadian population

Page: 14


Elderly Mortality Rates have decreased over the last 80 years, more so over the last 10 years

Source: Canada : Office of the Chief Actuary, 26th CPP Actuarial Report and Statistics Canada catalogue 84-215-x
U.S. : 2012 OASDI Trustees Report and U.S. National Vital Statistics Report, Volume 60 No.3
All rates are standardized using the 2012 Canadian population

Page: 15


For ages over 90, heart diseases remain the main cause of deaths

Source: Canada : Office of the Chief Actuary, 26th CPP Actuarial Report and Statistics Canada catalogue 84-215-x
U.S. : 2012 OASDI Trustees Report and U.S. National Vital Statistics Report, Volume 60 No.3
All rates are standardized using the 2012 Canadian population

Page: 16


Cohort Life Expectancy at Age 65

Source: Canadian Human Mortality Database, Dept. of Demography of University of Montreal, and Office of the Chief Actuary, 26th CPP Actuarial Report

Page: 17


By 2030, Canada is projected to be behind UK and Switzerland for males

Source: 17th International Conference of Social Security Actuaries and Statisticians and Dept. of Population, Japan

Page: 18


Japanese, British, Swiss, French and Finnish women are all projected to live longer than Canadian women by 2030

Source: 17th International Conference of Social Security Actuaries and Statisticians and Dept. of Population, Japan

Page: 19


Uncertainty of Results Life Expectancies at age 65 if MIRs by cause are sustained

Page: 20


Uncertainty of Results: Life Expectancies at 65 if heart diseases and cancer gradually removed over 75 years

Page: 21


Uncertainty of results: mixed stochastic/deterministic approach produces wide range of life expectancies

Page: 22


Can We Live Beyond 100 Years? Probability of living to 100 for Canada, the U.S. and the U.K.

Source: 2012 OASDI Trustees Report, UK Office for National Statistics, 26th CPP Actuarial Report

Page: 23


Survival Curves for a Life Expectancy of 100 (Males)

Page: 24


To live beyond 100…

  • If mortality rates decrease at the same pace as observed over the past 15 years (2.5%/year males, 1.5%/year females), a life expectancy of 100 could be attained in 85 years (2094) for males and in 112 years (2121) for females.
  • A reduction of mortality rates at each age by 87% for males and 82% for females results in a life expectancy of 100.
  • Using the “age mapping” (a mathematical technique), life expectancy of 100 is also achievable if the maximum life span increases to 140 years for males and 132 years for females

Page: 25


Conclusions

  • Retirement is expensive and will become even more expensive in the future with improved longevity
  • Projected mortality rates after 2030 are highly uncertain, especially for people older than age 90
  • It is a professional duty of the actuary to examine all available information in order to develop best-estimate mortality assumptions.

Page: 26


Mortality Projections of Public Pension Plans in Canada and its financial implications
Appendix

Page: 27


Cancer is the most common cause of death amongst disability beneficiaries

Source: Office of the Chief Actuary, Actuarial Study No. 9: CPP Experience Study of Disability Beneficiaries, September 2011

Page: 28


The marital status tends to impact men more than women. The difference in life expectancy is 3.3 years for men and 1.7 for women

Source : Office of the Chief Actuary, Actuarial Study No. 11: Old Age Security Program Mortality Experience, July 2012

Page: 29


A high level of income is a predictor of lower mortality
The difference in life expectancy is 2.4 years for men and 2.1 for women

Source: Office of the Chief Actuary, Actuarial Study No. 11: Old Age Security Program Mortality Experience, July 2012

Page: 30


Canadian historical annual mortality improvement rates are used as a starting point of projections

Source: Estimated by OCA based on data from Canadian Human Mortality Database, Dept. of Demography of University of Montreal

Page: 31


CPP26 Annual Mortality Improvement Rates (%)

Males
Age 2010 2011-2029 2030+
15-54 2.4 1.5 0.8
55-64 2.3 1.5 0.8
65-74 3.0 1.8 0.8
75-84 2.6 1.7 0.8
85-89 2.0 1.3 0.6
90-94 1.3 0.8 0.4
95+ 0.4 0.3 0.3
Females
Age 2010 2011-2029 2030+
15-54 1.3 1.0 0.8
55-64 1.7 1.2 0.8
65-74 1.8 1.3 0.8
75-84 1.7 1.3 0.8
85-89 1.5 1.1 0.6
90-94 1.2 0.8 0.4
95+ 0.4 0.3 0.3
  • 2010 MIRs are set equal to the average annual rates of mortality improvement over the last known 15 years 1994-2009, by age and sex
  • Ultimate improvement rates are set to about ½ of females last 15 years experience
  • MIRs for the intermediate period (2011-2029) are derived from interpolating the MIRs between 2010 and 2030 using cubic functions.

Page: 32


Mortality Rates have decreased significantly over the last 80 years, less so over the last 20 years

Source: Canada : Office of the Chief Actuary, 26th CPP Actuarial Report and Statistics Canada catalogue 84-215-x
U.S. : 2012 OASDI Trustees Report and U.S. National Vital Statistics Report, Volume 60 No.3
All rates are standardized using the 2012 Canadian population

Page: 32


For ages 1 to 14, main causes of death are accidents, followed by cancer

Source: Canada : Office of the Chief Actuary, 26th CPP Actuarial Report and Statistics Canada catalogue 84-215-x
U.S. : 2012 OASDI Trustees Report and U.S. National Vital Statistics Report, Volume 60 No.3
All rates are standardized using the 2012 Canadian population

Page: 33


Compression of Survival Curve

Evolution of Distribution of Age at Death
Males Females
Birth Year Bottom 15th percentile 15th to 85th Percentile Top 15th Percentile Bottom 15th percentile 15th to 85th Percentile Top 15th Percentile
1925 (0-11) (12-83) (84+) (0-23) (24-84) (85+)
1950 (0-49) (50-84) (85+) (0-55) (56-87) (88+)
1975 (0-55) (56-85) (86+) (0-64) (65-91) (92+)
2010 (0-66) (67-92) (93+) (0-71) (72-95) (96+)
2013 (0-67) (68-92) (93+) (0-72) (73-95) (96+)
2025 (0-69) (70-94) (95+) (0-74) (75-96) (97+)
2050 (0-71) (72-95) (96+) (0-76) (77-98) (99+)
2075 (0-74) (75-97) (98+) (0-78) (79-99) (100+)

Probabilities are based on the mortality rates of the calendar year of birth.

Page: 34


Survival Curves for a Life Expectancy of 100 (Females)

Page: 35


Mortality Projections of Public Pension Plans in Canada and its financial implications

Jean-Claude Ménard, Chief Actuary Office of the Chief Actuary Office of the Superintendent of Financial Institutions Canada

Thank you

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