Dutch pension funds face a 1 per cent increase in their liabilities following the publication of new life expectancy forecasts, analysis by Aon Netherlands has found.

The Royal Dutch Actuarial Association (AG) has published its latest, AG Prognosetafel 2022, of its life expectancy predictions for the Netherlands. The AG calculated that life expectancy in the country continues to rise, and faster than previously expected.

The AG based its calculations on mortality observations in European countries with a comparable level of prosperity, with a specific adjustment for Dutch mortality. Based on historical observations, it is expected that the life expectancy of women in the Netherlands will increase somewhat faster than the life expectancy of men in the Netherlands.

Furthermore, the calculation method for the mortality probabilities of those above the age of 90 has been adjusted, which has had an increasing effect on life expectancy.

The life expectancy for a 0-year-old rises for men from 89.5 to 90 years and for women from 91.9 to 92.8 years.

Aon said that if Dutch pension funds switch to the new forecast table, the average funding ratio would fall by approximately 1 percentage point to 127 per cent.

In regard to the coronavirus pandemic, it is well known that it led to more deaths than normal in 2020 and 2021, termed excess mortality. However, AG’s forecast table only takes into account the effects of Covid-19 on people over the age of 55, as it said deaths are more likely in the elderly, rather than those under 55.

According to analysis by Aon, mortality (up to and including July) in 2022 among retirees over 80 years of age will be 7 per cent higher than expected. Mortality among the population younger than 65 was approximately 7 per cent lower than expected. On balance, there will be an excess mortality of approximately 3 per cent for the entire Dutch population over the first seven months of 2022.

“There is too much uncertainty about how this virus will develop, which is why the coronavirus crisis has been included in a very limited way in the AG's forecast table, an approach that we can understand,” Aon Wealth Solutions CEO, Frank Driessen, said.

“The title of the AG's publication is Live longer in uncertain times. In fact, this indicates that life expectancy is increasing, but also that there is still great uncertainty about the Covid-19 effects and the possible chance of a new pandemic.”

Share Story: