LCP responds to latest CMI Mortality Projections Model

As part of the most in-depth review for several years, today the CMI published its proposed changes to its Mortality Projections Model.

These proposals are significant as the model is used by almost all trustees of defined benefit pension schemes for assessing the funding position of their schemes, and for sponsors to report their schemes’ financial position on their balance sheets.

The proposals include two key changes from previous versions of the model, intended to ensure the model better reflects the real world:

• The model now directly incorporates the impact of the pandemic on mortality rates, whereas previous versions sought to smooth through the distortion produced by the pandemic to project underlying mortality improvements. 
• The model now allows different mortality trends for different age groups. This better reflects recent trends where mortality has improved more rapidly for pensioners than for people of working age.