Projection table AG2016
Life expectancy in the Netherlands has increased steadily during the past 50 years. This trend has had a considerable impact on society. For pension funds and life insurers it is important to have continuous insight into this development in order to be able to fulfil the promises they have made.
The Royal Dutch Actuarial Association (Koninklijk Actuarieel Genootschap or ‘AG’) sees it as its role to provide the financial sector with an insight into these developments by means of projection life table. The new Projection Table AG2016 is based on the same model which formed the basis for Projection Table AG2014. It is a fully transparent model with a limited number of parameters, so that it can be explained well and can be reconstructed precisely. This is consistent with the Association’s aim of making knowledge accessible to and applicable by the financial sector.
The most important characteristic of the projections in AG2016 is stated below:
Projection Table AG2016 is based on a stochastic model, as a result of which it is also possible for pension funds and life insurers to estimate the uncertainty of the projections. This is important in setting the prices of financial derivatives and determining the buffers to be maintained in relation to uncertainties regarding mortality.
In addition to historic mortality in the Netherlands, Projection Table AG2016 is also based on the mortality of a number of European countries with a comparable level of prosperity. This combination of data results in a stable model which is less sensitive to incidental variances in a particular year in the Netherlands.
On the basis of Projection Table AG2016, it is possible to estimate mortality in the distant future. It is possible to monitor someone born in 2016 throughout his or her life because mortality can be estimated for every future age.
Projection Table AG2014 was determined separately for men and women. In the case of the projection life table for 2016, use was made of the correlation between the development of mortality amongst men and women.
In this publication, the Association’s Mortality Research Committee discusses the development and outcomes of Projection Table AG2016 in more detail. As the chairman of the Royal Dutch Actuarial Association, I wish to express my gratitude to the members of the Mortality Research Committee and the members of the Projection Tables Working Group for the considerable good work that they have done.
View Projection table AG2016