1Office of the Chief Actuary Bureau de l’actuaire en chef

Mortality projections for Social Security Programs in Canada and

its implications

Presentation to the Living to 100 International Research Symposium, Orlando, United States

8 January 2008

2Office of the Chief Actuary Bureau de l’actuaire en chef

Presentation• General Population Mortality Trends in Canada

• Mortality Experience by Income and Marital Status

• Mortality Projections

• Uncertainty of Results and International Comparison

Prince George, British Columbia

3Office of the Chief Actuary Bureau de l’actuaire en chef

Life Expectancy at Birth

50

55

60

65

70

75

80

85

1901 1921 1931 1941 1951 1961 1971 1981 1986 1991 1996 2001 20060

2

4

6

8

10

12

14

DifferenceMaleFemale

Source : Life Tables for Canada, Statistics Canada

4Office of the Chief Actuary Bureau de l’actuaire en chef

Life Expectancy at Age 65

12

13

14

15

16

17

18

19

20

21

22

1901 1921 1931 1941 1951 1961 1971 1981 1986 1991 1996 2001 20060

1

2

3

4

5

6

7

8

9

10

DifferenceMaleFemale

Source : Life Tables for Canada, Statistics Canada

5Office of the Chief Actuary Bureau de l’actuaire en chef

Presentation

Rivière-du-Milieu, Québec

• General Population Mortality Trends in Canada

• Mortality Experience by Income and Marital Status

• Mortality Projections

• Uncertainty of Results and International Comparison

6Office of the Chief Actuary Bureau de l’actuaire en chef

Mortality Ratios by income

0.6

0.8

1.0

1.2

1.4

1.6

65 70 75 80 85 90 95 100

Mid to High Income Males

Mid to High Income Females

Low Income Males

Low Income Fermales

Source : Old Age Security Administrative Database, Actuarial Study no 5

7Office of the Chief Actuary Bureau de l’actuaire en chef

Mortality Ratios by Marital Status

0.6

0.8

1.0

1.2

1.4

1.6

65 70 75 80 85 90 95 100Age

Males Single

Males Married

Females Single

Females Married

Source : Old Age Security Administrative Database, Actuarial Study no 5

8Office of the Chief Actuary Bureau de l’actuaire en chef

Life Expectancies at 65 by StatusMales Females

Status Total Single Married Delta Total Single Married DeltaOAS 16.6 14.2 17.9 +3.7 20.2 19.7 21.0 +1.3

Low Income Seniors 15.0 13.0 16.3 +3.3 19.0 18.6 19.8 +1.2

High-Income Seniors 19.5 17.6 20.6 +3.0 22.4 22.1 23.3 +1.2

Differential Between High and

Low Income Seniors

+4.5 +4.6 +4.3 - +3.4 +3.5 +3.5 -

Born in Canada 16.2 - - - 19.9 - - -Born Outside

Canada 17.8 - - - 21.1 - - -

Source : Old Age Security Administrative Database, Actuarial Study no 5

9Office of the Chief Actuary Bureau de l’actuaire en chef

Presentation

Jasper National Park, Alberta

• General Population Mortality Trends in Canada

• Mortality Experience by Income and Marital Status

• Mortality Projections

• Uncertainty of Results and International Comparison

10Office of the Chief Actuary Bureau de l’actuaire en chef

Average Annual Rates of Mortality Improvement(2007 Population-Weighted)

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

1944-1974 1974-1989 1989-2004 1944-1974 1974-1989 1989-2004

15-6465-89

15-6465-89

MALES FEMALES

11Office of the Chief Actuary Bureau de l’actuaire en chef

Annual Mortality Improvement Rates (1974-2004)

Males Females

Age Group 1974-1989 1989-2004 1974-1989 1989-2004

15-44 2.8% 2.6% 2.8% 1.4%

45-64 2.6 2.4 1.9 1.5

65-84 1.2 2.0 1.6 1.2

85-89 0.8 0.8 1.5 0.4

90+ -0.6 0.0 0.1 -0.1

15-64 2.7 2.4 2.1 1.5

65+ 1.0 1.6 1.3 0.8

0-84 1.8 2.2 1.8 1.3

12Office of the Chief Actuary Bureau de l’actuaire en chef

Determining the ultimate improvement rateForward-looking females improvement rates

Last 30 years Continuing the trend for the next 30 years

1974-1989 1989-2004 2004-2019 2019-20340-44 3.41% 1.67% 0.81% 0.40%0-64 2.33 1.53 1.01 0.670-74 1.99 1.45 1.05 0.760-79 1.86 1.40 1.05 0.790-84 1.80 1.31 0.96 0.7065+ 1.27 0.76 0.45 0.27

80-84 1.63 1.07 0.71 0.4785-89 1.49 0.41 0.11 0.0390+ 0.14 -0.07 0.00 0.00

13Office of the Chief Actuary Bureau de l’actuaire en chef

Assumed Annual Rates of Improvement

Males FemalesAge 2005-2009 2029+ 2005-2009 2029+

(%) (%) (%) (%)15-44 2.8 0.7 1.6 0.745-64 2.1 0.7 1.4 0.765-84 2.0 0.7 1.2 0.785-8990-9495+

0.80.50.0

0.60.40.4

0.50.30.0

0.60.40.4

For the next 25 years (2005-2029), the average annual rates of mortality improvement is respectively 1.5% and 1.0% for males and females aged between 65 and 84.

14Office of the Chief Actuary Bureau de l’actuaire en chef

Projected Mortality Rates (Ages 45 to 64)

0

2

4

6

8

10

12

14

16

18

1966 1976 1986 1996 2006 2016 2026 2036 2046 2056 2066 2076

Can-MalesCan-FemalesUS-MalesUS-Females

9.2 per 1,000 2.4 per 1,0004.4 per 1,000

15Office of the Chief Actuary Bureau de l’actuaire en chef

Projected Mortality Rates (Ages 65 to 84)

0

10

20

30

40

50

60

70

80

1966 1976 1986 1996 2006 2016 2026 2036 2046 2056 2066 2076

Can-MalesCan-FemalesUS-MalesUS-Females

51 per 1,000 28 per 1,000 16 per 1,000

16Office of the Chief Actuary Bureau de l’actuaire en chef

Projected Mortality Rates (Ages 85-99)

0

20

40

60

80

100

120

140

160

180

200

1966 1976 1986 1996 2006 2016 2026 2036 2046 2056 2066 2076

Can-MalesCan-FemalesUS-MalesUS-Females

150 per 1,000 100 per 1,000 70 per 1,000

17Office of the Chief Actuary Bureau de l’actuaire en chef

Projected Mortality Rates (Ages 100+)

0

50

100

150

200

250

300

350

400

450

500

1966 1976 1986 1996 2006 2016 2026 2036 2046 2056 2066 2076

Can-MalesCan-FemalesUS-MalesUS-Females

450 per 1,000 340 per 1,000 270 per 1,000

18Office of the Chief Actuary Bureau de l’actuaire en chef

Survival Curves at Birth for Canadian Males

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

0 10 20 30 40 50 60 70 80 90 100 110Age (years)

Probability of surviving from birth to given age

1925

1975

2075

2025

2005

e0 = 70 e0 = 81

70% of males could expect to die between ages 16 and 83 (1925), between 65 to 89 (2000) and between 74 and 95 (2075).

19Office of the Chief Actuary Bureau de l’actuaire en chef

Survival Curves at Birth for Canadian FemalesProbability of surviving from birth to given age

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

0 10 20 30 40 50 60 70 80 90 100 110Age (years)

1925

19752075

2025

2005

e0 = 77 e0 = 85

70% of females could expect to die between ages 24 and 84 (1925), between 71 and 94 (2005) and between 78 and 98 (2075).

20Office of the Chief Actuary Bureau de l’actuaire en chef

Presentation

Cisco, British Columbia

• General Population Mortality Trends in Canada

• Mortality Experience by Income and Marital Status

• Mortality Projections

• Uncertainty of Results and International Comparison

21Office of the Chief Actuary Bureau de l’actuaire en chef

Sensitivity test using stochastic processCanadian Life Expectancies, with improvements after the year shown

At birth Actuarial Report Lower 95% CI Higher 95% CI

2007 84.5 79.1 88.4

2007 87.7 80.6 92.0

2007 19.3 17.6 20.7

2007 22.0 19.5 24.0

Males 2050 87.4 80.8 91.3

2075 88.8 81.6 92.8

Females 2050 90.2 81.9 94.6

2075 91.5 81.9 95.9

At 65

Males 2050 21.9 17.8 25.1

2075 23.1 17.9 26.6

Females 2050 24.2 18.6 27.9

2075 25.4 18.4 29.4

22Office of the Chief Actuary Bureau de l’actuaire en chef

Evolution of Asset/Expenditure Ratio (9.9% Contribution Rate)

The minimum contribution rate falls between 9.2% and 10.2%

0

5

10

15

20

25

2007 2017 2027 2037 2047 2057 2067 2077

Lower Life Expectancy 23rd CPP Report Higher Life Expectancy

23Office of the Chief Actuary Bureau de l’actuaire en chef

Life expectancy at age 65 for men, 2000-2030(with no future improvements after year shown)

10 12 14 16 18 20 22 24

Canada

Japan

United Kingdom

Quebec

Finland

France

Sweden

Switzerland

Italy

United States

1960 1980 2000 2010 2020 2030

24Office of the Chief Actuary Bureau de l’actuaire en chef

Life expectancy at age 65 for women, 2000-2030 (with no future improvements after year shown)

12 14 16 18 20 22 24 26

Canada

Japan

United Kingdom

Quebec

Finland

France

Sweden

Switzerland

Italy

United States

1960 1980 2000 2010 2020 2030

25Office of the Chief Actuary Bureau de l’actuaire en chef

Thank you

Mortality projections for Social Security Programs in Canada and

its implications

Jean-Claude Ménard, Chief ActuaryOffice of the Chief Actuary

Office of the Superintendent of Financial Institutions Canada