Projections Life Table AG2020
For decades, life expectancy has increased steadily in the Netherlands as well as in the neighbouring countries. This trend has had a large impact on society. It is important for pension funds and life insurers to understand the development of life expectancy in order to be able to estimate future cashflows and thus to set provisions.
Every two years The Royal Dutch Actuarial Association (Koninklijk Actuarieel Genootschap or ‘AG’) publishes a new Projections table, providing an insight into the expected development of life expectancy in The Netherlands, based on the most recent information at the time.
By publishing Projections Life Table AG2020 AG presents its most recent estimation of future mortality of the Dutch population to date. This estimation is based on mortality data from both the Netherlands and European countries of similar prosperity. Projections Life Table AG2020 replaces Projections Life Table AG2018.
The most important features of the Projections Life Table AG2020 are:
- Projections Life Table AG2020 can be used to estimate mortality levels far into the future. Expected future developments in mortality can be factored into calculations of life expectancy and provisions.
- In addition to historical mortality in the Netherlands, Projections Life Table AG2020 also uses mortality data from selected European countries with similar prosperity levels. This combination of data leads to a stable model less sensitive to random aberrations in the Dutch data for any one year.
- Projections Life Table AG2020 is based on a stochastic model, enabling pension funds and life insurers to also estimate the uncertainty of the forecast.
After the publication of AG2018 various analyses were conducted in preparation of Projections Life Table AG2020. These were partly driven by questions and suggestions from the profession. With the analyses further refinements of the model were tested. The selection of the AG2020 model was based on a number of science-based statistical model selection criteria. Model outcomes must be plausible as well as explicable. Stability and robustness of the model are important factors too. Finally, coherence is an important criterion, meaning that future mortality in the Netherlands and the selected European countries will not diverge significantly.
View Projections Life Table AG2020
Guest Comment: Slowing longevity and its impact on pensions (European Pensions, 28 October 2020)