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In 2023, there was a notable increase in registered deaths in England and Wales, highlighting the emerging challenge of longevity volatility for pension schemes.
Recent data from the Office for National Statistics (ONS) reveals that the number of registered deaths in England and Wales rose by 0.7% in 2023 compared to the previous year, reaching a total of 581,363 deaths.
Additionally, this figure surpassed the five-year average (2017 to 2022 excluding 2020) by 27,528 (4.7%).
The trend of more registered deaths among males than females observed in 2021 and 2022 persisted into 2023.
Registered deaths exceeded the five-year average in every English region in 2023. The South-West of England experienced the highest percentage increase at 6.3%, while London had the smallest increase at 0.8%.
With longevity volatility on the rise for pension schemes in the UK, it is likely that this will fuel greater demand for longevity insurance and reinsurance.
David Hamilton, Chief Actuary at leading consultancy Broadstone, commented on the data, stating, “With an ageing population, the Covid-19 pandemic and a struggling NHS, it’s no wonder that we’ve seen mortality rates inch upwards over the past few years.”
He adds, “While the data points to the pandemic as the main driver behind the uptick in mortality rates, this potentially glosses over some more fundamental long-term problems and systemic issues that could affect the population for decades to come. Understanding and allowing for these longevity risks will likely become an increasingly important consideration for insurers and those running and supporting pension schemes, as pressures on the NHS continue to swell and accessibility to effective healthcare declines.
“For DB pension schemes, a longer-term view is crucial. Having taken huge steps to reduce interest rate and inflationary risks over recent years, shifting longevity is increasingly becoming one of their biggest areas of risk.
“With life expectancy becoming increasingly difficult to project, trustees, sponsors and insurers alike should make sure they are considering this key area of uncertainty to better understand the financial implications of alternative scenarios,” Hamilton concludes.
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