Record-low mortality and a further rise in projected life expectancy are set to feed directly into UK life insurers' reserving, pricing and pension risk transfer activity after the Continuous Mortality Investigation's latest projections pointed to longer retiree lifetimes but a still-muted long-term outlook compared with pre-pandemic expectations.
According to the CMI’s 2025 projections, mortality in England and Wales has now fallen for five consecutive years since 2020, with all‑age mortality in 2025 at its lowest level on record and around 2% below 2024. Early data for 2026 indicated deaths are running at a new low for the time of year.
The improvement is concentrated at pensioner ages. At older ages, mortality in 2025 reached record lows, which translates into higher projected life expectancy at 65. However, death rates for males aged 45–64 remained above the 2015–2019 average, underlining a split between working‑age and retirement‑age experience that insurers will need to treat differently in annuity and protection portfolios.
On the back of this experience, the CMI’s core projection now shows cohort life expectancy at age 65 roughly eight weeks higher for males and about six weeks higher for females than under the previous year’s calibration. That is a measurable shift at portfolio level, even if it appears modest for an individual.
At the same time, the long‑run picture remains more subdued than before the 2010s slowdown in improvements and the COVID‑19 shock. The CMI’s analysis suggested that, on a like‑for‑like basis, cohort life expectancy at 65 under the 2025 model is still around 18 months lower than in the first published version in 2009. In other words, recent gains have not restored the more optimistic longevity path that was widely assumed before the last decade and a half.
The CMI has also highlighted that mortality fell steadily from the mid‑1980s to around 2011, improved only slowly from 2011 to 2019, spiked sharply in 2020 back to levels last seen in 2008, and has since fallen back to new lows. Insurers therefore face a data set that combines a long period of strong improvement, a plateau, a pandemic shock and an unusually strong post‑shock rebound.
Longer projected lifetimes at 65 mean higher expected payout periods where firms adopt the updated projections. On large in‑force and new business portfolios, particularly in the bulk purchase annuity market, this can push technical provisions and pricing margins higher, even if the change in years of life expectancy looks small.
The effect on any one firm will depend on its existing assumptions. Companies that had already “built in” a recovery in mortality may see relatively limited changes; those that took a more cautious stance after COVID‑19 could face a more noticeable uplift in liabilities if they move fully to the latest projections.
The timing is also important for the UK pension risk transfer market, which has seen record, or near‑record, bulk annuity volumes in recent years, with annual transactions in the tens of billions of pounds and a growing roster of insurers competing for deals.
Bulk annuity and buy‑in pricing typically references the latest CMI projections, adjusted for each scheme’s experience and membership profile. If insurers adopt the new projections in their pricing and do not fully offset them with additional prudence, premiums for buy‑ins and buy‑outs would be expected to edge up as longer retiree lifetimes are costed in.
For schemes already close to a transaction, the update is another factor when deciding whether to lock in terms or wait. Improved funding levels, a more crowded insurer market and still‑strong overall appetite for de‑risking will be weighed against the possibility that longevity assumptions may harden further if low mortality persists.
On the capital and reserving side, the new projections will also feed into Solvency II and the evolving UK regime, where many firms use CMI outputs as a base for longevity improvement assumptions in internal models.
A further year of very low mortality strengthens the case for incrementally higher central longevity assumptions. However, boards and regulators are unlikely to endorse large changes in long‑term trend views or longevity stresses on the back of a short run of favourable data. Questions remain over future health trends, the longer‑term effects of COVID‑19 and potential macro‑ or climate‑related impacts on mortality.
In practice, many insurers are expected to update best‑estimate assumptions in line with the new projections while keeping stress calibrations and capital margins under review rather than relaxing them. The CMI’s regular mortality monitors, alongside firms’ own experience studies, will be key in determining whether the current pattern represents a durable shift or a period of unusually benign conditions.
