Projection table AG 2014
Life expectancy in the Netherlands has increased by approximately two years every decade in the past 50 years. This is a tendency which has had an impact on society on all sorts of fronts. It means that each generation will be more than five years older than the previous generation. Particularly for pension funds and life insurers it is essential to have insight continuously into this development in order to fulfil their responsibility to society as well as possible.
The Royal Dutch Actuarial Association (AG) sees it as its role to provide the financial sector with the statistical information necessary for this and to provide an insight by means of projection tables. In doing so, it continuously strives to make improvements. The following changes have therefore been made in relation to the previous projection tables:
- For the first time, the Projection Table AG2014 is based on a stochastic model which makes it possible for pension funds and life insurers to estimate the uncertainty of the projection in addition to future mortality. This is important information which is needed to provide a well-founded opinion on the pricing of financial derivatives and the buffers which have to be maintained in relation to the uncertainties with regard to mortality.
- Where the Projection Table AG2012-2062 was exclusively based on historic mortality in the Netherlands, Projection Table AG2014 is partly based on historic mortality in a number of European countries of comparable wealth. These additional data ensure a more stable model which is less sensitive to incidental deviations in any particular year in the Netherlands.
- With its publication of the Projection Table AG2012-2062, the Royal Dutch Actuarial Association (hereinafter "the Association") also published a table in which future mortality with an horizon of 51 years was forecast. With the publication of the new projection table, an estimate can now also be given of mortality in the more distant future. As a result, it is possible to monitor a person born in 2014 throughout his or her life because the mortality probability for each future age can be determined.
Finally, the Association has opted for a fully transparent model with a limited number of parameters so that it can be explained well and can be reconstructed exactly. This is entirely consistent with the Association's aim, set out in its long-term plan 2014- 2017, namely to make knowledge available to and applicable by the financial sector.
In this publication, the Mortality Research Committee (hereinafter MRC) will discuss the developments referred to above in more detail. With the publication of Projection Table AG2014, the Association has assumed its responsibility as the knowledge partner of the future for the sector.