Exploring Retiree Mortality

As part of our thought-leadership series, the Institute has released a new research paper Exploring Retiree Mortality.

The paper calls for the development of mortality tables for purchasers of annuities and other guaranteed income products. There is currently a shortage of such data because Australians have preferred to take products such as Account-Based Pensions, where there is no longevity protection. However, with Comprehensive Income Products for Retirement (CIPRs) set to be part of the future landscape, more Australians are expected to take up a component of these products in order to better manage longevity risk. Reliable data is needed to ensure pricing and product design decisions support strong and sustainable customer value propositions whilst protecting the financial standing of the product issuers.

The research drew on Continuous Mortality Investigation data kindly provided by the UK Institute and Faculty of Actuaries and provides a useful starting point.  

Key points include: 

  • There is a significant selective effect on mortality rates from voluntary purchase of these products which can impact perceptions of value for money.
  • There is a distinct socio-economic effect which could affect equity and is relevant to understanding demand for these products.
  • There is also a lifestyle effect which could provide specific product opportunities to better meet customer needs.

The research paper was prepared by Rice Warner on behalf of the Actuaries Institute and funded by a generous donation from Melbourne actuary David Orford.