Scheme funding (part 3) valuation
Life expectancy
Why are we asking these questions about life expectancy?
See our mortality consultation report paragraph 3.21.
What does 'period life expectancy' and 'cohort life expectancy' mean?
See explanation for more information
'Period @ 65 - this is the expected age at death for a 65-year-old if post valuation date improvements are assumed to be zero.'
'Cohort @ 65 - this is the expected age at death for a 65-year-old pensioner at valuation date allowing for future improvements.'
'Cohort @ 45 - this is the expected age at death for a 65-year-old pensioner on retirement 20 years after valuation date allowing for future improvements.'
Surely these questions are only for round 2 valuations with effective dates on or after 22 September 2008. Why are you asking them in the current scheme return?
We think it is of value to build up our database on these assumptions sooner rather than later, so that the first round 2 valuations can be considered in context. We believe that the information is readily available for most schemes without additional work. Equally, we understand that some schemes will find this difficult to complete and will not do so.
What is it that you are looking for?
It is the cohort expectancy implied by the tables used - it doesn't matter whether the tables used are C= or U= or involve the cohort adjustments.
Example 1: If PMA92 tables with year of birth and long cohort is adopted for both current and future pensioners
Formally this is PMA92lc(U=2008)
Period life expectancy for a 65-year-old now
= life expectancy for a 65-year-old using the 92 tables with long cohort projections to CY 2008 = 86.0
Cohort life expectancy for a 65-year-old now
= life expectancy for a 65-year-old using the 92 tables year of birth=1943 with long cohort = 88.7
Cohort life expectancy at 65 for a 45-year-old now
= life expectancy for a 65-year-old using the 92 tables year of birth=1963 with long cohort = 89.8
Example 2: Where current pensioner assumption is PMA92 long cohort to CY 2020, where future pensioner assumption is PMA92 long cohort to CY 2030
Formally this is PMA92lc(C=2020/2030)
Period life expectancy for a 65-year-old now is unknown if no decision has been made on split between base and improvement. We expect that most will regard their approach as an approximation to 92lc YoB and hence put in 86.0
Cohort life expectancy for a 65-year-old now
= life expectancy for a 65-year-old using the 92 tables long cohort projections to 2020 = 88.3
Cohort life expectancy at 65 for a 45-year-old now
=life expectancy for a 65-year-old using the 92 tables long cohort projections to 2030 = 89.2.