# OFSI releases new mortality projections for Canadian Social Security programs



## MoneyGal (Apr 24, 2009)

Highlights from the report on the projections:

The chance of a newborn reaching age 65 has significantly increased over time, going from 57% in 1925 to 87% in 2010 for males, and from 60% to 91% for females over the same period. By 2075, it is projected that 93% of male newborns and 95% of female newborns will reach age 65.

Over the recent 30 years from 1979 to 2009, increases in life expectancy in Canada have been largely due to the reduction of mortality rates after age 65, as a result of a decrease of deaths caused by diseases of the heart. Over the same period, malignant neoplasms surpassed diseases of the heart to become the most important cause of death among those aged 65 and older.

Over the last decade in Canada, life expectancy at age 65 increased by two years, a rate of growth of about twice of what has been observed over each of the previous decades since 1929. It is further projected to increase from 21 to 24 years for men and from 23 to 26 years for women by 2075. This means that Canadians are expected to live beyond age 90 on average in the future.

Life expectancies at birth of Canadians are projected to increase from 86 to 90 for men and from 89 to 93 for women over the period of 2013 to 2075.
Currently, five out of ten Canadians aged 20 are expected to reach age 90, while only one out of ten is expected to live to 100.

A life expectancy at birth of 100 years would be possible if no one died until one’s late nineties, and if the same mortality rates at advanced ages as those experienced in 2009 applied.

If mortality rates continue to decrease at the same rate as experienced over the last 15 years, a life expectancy at birth of 100 could be reached in 2094 for men and in 2121 for women. In addition, male life expectancy could exceed that of females from 2026 onward.

It is expected that Canada will continue to have one of the highest life expectancies of the world along with Japan, France, Switzerland, Italy and Australia.

Over the recent past 20 years (1989-2009), 59% of the increase in life expectancy for males (3.0 out of 5.1 years) came from mortality improvements (i.e. reductions in mortality rates) at ages 65 and over. 

For females, the corresponding proportion is 67% (2.0 out of 3.0 years) over the same period. 

These proportions reached 75% (2.1 out of 2.8 years) for males and 83% (1.5 out of 1.8 years) for females over the most recent 10-year period (1999-2009), and this trend is expected to continue in the future. 

*As a result, life expectancy of the Canadian population at age 65 has grown by almost two years (from 18.6 to 20.5 years) over the last 10 years (1999-2009), a rate of growth of about twice of what has been observed over each of the previous decades since 1929. Furthermore, as highlighted in Table 3, the increase in life expectancy at age 65 is now (1999-2009) mainly the result of improvements in mortality coming from ages 75 and over (60% of the increase for males and 80% of the increase for females).*

Full report here: http://www.osfi-bsif.gc.ca/Eng/oca-bac/as-ea/Pages/mpsspc.aspx#TOC-Ic


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## fraser (May 15, 2010)

Are these stats similar to what is currently incorporated into current annuity rates, or do you expect annuities to increase in cost because of this data?


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## MoneyGal (Apr 24, 2009)

Lifecos are not required to use population mortality tables, but use their own tables; the life tables used by lifecos will differ, potentially substantially, from these tables due to the phenomenon of adverse selection (people only buy annuities if they think they're going to "beat the odds" and live a longer-than-average lifetime). 

In general, however, I do think annuity prices will rise over time as a result of longevity gains, independent of any other factors (i.e. interest rates).


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## amitdi (May 31, 2012)

Interesting numbers. I think even people will continue (some may have to) to work until late 60s, maybe 70s...


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## dubmac (Jan 9, 2011)

invest in retirement home REIT's - does anyone know a good one?


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## MoneyGal (Apr 24, 2009)

Update: I co-wrote a piece for the Toronto Star on this issue, that was published this past Saturday: http://www.thestar.com/business/per...longer_can_hurt_your_retirement_planning.html

(p.s. I know there are both math and copy errors in that version; I'm trying to figure out how they got it to the version published.)


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## Synergy (Mar 18, 2013)

dubmac said:


> invest in retirement home REIT's - does anyone know a good one?


I'm holding CSH to play the aging demographic. There's a nice facility located in my home town that recently announced that they are expanding - ran out of space. Growth looks good going forward and they may eventually become a target for a take-over.


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## AltaRed (Jun 8, 2009)

I've looked at CSH's metrics a number of times. Seems to be a sidewinder not going anywhere fast...yet. What evidence is there in their metrics for growth?


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## Synergy (Mar 18, 2013)

AltaRed said:


> I've looked at CSH's metrics a number of times. Seems to be a sidewinder not going anywhere fast...yet. What evidence is there in their metrics for growth?


What do you mean by sidewinder? It's outperformed the TSX by over 60% over the last 5 yrs. Metrics haven't been great in the past but managements seems to be trying to turn things around. As long as interest rates don't shoot to the moon CSH should be able to improve some of it's fundamentals over the next few years.


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## AltaRed (Jun 8, 2009)

It's the metrics (and fundamentals) I am focused on rather than price appreciation since the depths of the financial crisis. Past price performance is a rear view mirror, albeit, I do look at 52 week highs and lows when considering the timing of a new position. 

It does not seem to be much of a story over the past year but I could be convinced. It is the go forward story that is important and thus recent MD&A on development opportunities in the hopper.

Added: Sorry for taking this off the topic of the thread. The new data is not good news for DB plans, CPP, OAS or health care costs.


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## carverman (Nov 8, 2010)

AltaRed said:


> I
> The new data is not good news for DB plans, CPP, OAS or health care costs.


Looks like we can expect some major changes ahead?


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