For the first time in a decade the life expectancy of the Dutch is expected to decline, which is good news for pension funds, the two-yearly prognosis by the society of actuaries shows.
The new figures, which do not include the effects of coronavirus on life expectancy, predict that babies born in 2021 will now have one year less to live. For women the average age will be 92 and for men 89.
This means that pension funds and insurers, which rely on these figures to determine future money streams, will need fewer reserves because the time people draw their pensions is likely to be shorter. Pension funds could see their coverage ratio rise by around two percentage points.
This is good news for a number of pension funds which are expected to fall below the 90% coverage ratio at the end of the year and would therefore have to cut pensions. Based on the new predictions they may not now have to.
The main reason for the decline is an adaptation of the model used by AG, which now puts the life expectancy of Dutch women below the European average. The flu epidemic of 2018, which was unusually severe and killed nearly 10,000 people, also plays a role. The effects of the coronavirus are still too unclear to be taken into account, the actuaries said.
The state pension age too, set to rise to 67 in 2024, would be affected by the new figures but it is determined by figures on life expectancy from national statistics office CBS and these will not be published until later this year, the Financieele Dagblad said.
The AG is not sure whether the decline in life expectancy will continue and if coronavirus will increase the decline. ‘Much depends on how quickly a vaccine can be developed and the long-term consequences for the health of ex patients,’ actuary Marco van Winden told the paper.