Pension scheme mortality during the pandemic

Pensions in the pandemic

The Continuous Mortality Investigation (CMI) Self-administered Pension Schemes (SAPS) Committee has published its latest annual analysis of the mortality experience of pension scheme members. This covers the period 2013-2020, so is the first to include experience during the COVID-19 pandemic.

This blog briefly summarises key points from the analysis. CMI Subscribers can find more detail in Working Paper 158.

 

What data do we have?

The SAPS investigation collects data for self-administered pension schemes with more than 500 pensioners. This is provided by actuarial consultancies, the Pension Protection Fund (PPF) and the Government Actuary’s Department (GAD) and covers both private sector and public sector schemes.

The 2013-2020 dataset is large, comprising nearly 500 pension schemes, and nearly 30,000,000 years of exposure.

 

What happened to pension scheme mortality in 2020?

Because data is typically submitted for a pension scheme following its three-yearly valuation, we have much less data for 2020 than for earlier years. Also, the data for 2020 is weighted towards the period up to 5 April – before most of the impact of the pandemic on mortality occurred. This means that the data available to us for 2020 may not be representative of the wider SAPS dataset, so our findings are somewhat tentative, and we will review them as we receive more data.

Mortality in the SAPS dataset was higher in March, April, and May 2020 than in the corresponding months of 2019, and peaked in April 2020. This was followed by lower mortality in the third quarter of 2020 than in 2019, and heavier mortality in the final quarter of 2020 than in 2019.

This broad pattern is similar to that seen for the UK general population. However, comparing age-standardised mortality rates (ASMRs) suggests that the SAPS dataset may have had a smaller increase in mortality between 2019 and 2020 than the general population.

 

How does the experience compare to the S3 tables?

We have compared actual experience over 2013-2020 with what would have been expected based on the “S3” Series pensioner mortality tables, projected using the latest CMI Mortality Projections Model. On an amounts-weighted basis for Pensioners and Dependants, mortality has been a little higher than would have been expected. This may have been influenced partly by changes in the composition of the SAPS dataset over time rather than being solely due to mortality improvements.

Looking at specific pension amounts, we find that mortality has been lower than expected for those with smaller pensions and higher than expected for those with larger pensions. So the actual difference in mortality between pensioners with different pension amounts has been smaller than expected based on the “S3” series tables.

 

What are the Committee’s future plans?

We will continue to collect pension scheme data and publish annual analysis of mortality experience.

We are starting to give thought to when and how we produce the next set of pension scheme mortality tables – the “S4” Series. In particular, we are considering how best to reflect the socio-economic differences analysed in Working Paper 146, and how to deal with mortality during the pandemic.