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Drawing on our extensive overseas longevity modelling expertise, the Aon Longevity Model is a first-of-its-kind proprietary tool that uses location-based data to help Canadian pension plan sponsors develop a comprehensive, in-depth understanding of the likely life expectancies of plan participants, as well as the risks associated with those assumptions.
Longevity is a key component in effectively managing long-term risk and cost of pension plans
Leveraging the modelling capabilities of Aon's global network and our deep data sources has enabled the creation of a model that uses location-based data as a proxy for socio-economic status to create plan-specific mortality adjustments. This approach has been proven effective in the United Kingdom, where plan-specific analysis is standard practice for determining assumptions.
The power of data
The power of the Aon Longevity Model is the data behind it. Through the Aon Longevity Model, Aon Hewitt has identified several key insights into the longevity challenge facing pensions today. Among them:
The next generation in longevity modelling
Standard published mortality tables are appropriate without adjustment only for a limited number of pension plans, or where mortality adjustments are not considered necessary due to the materiality of the liability.
To date, with the exception of very large populations, it has not been possible to make pension plan-specific adjustments, as the experience of the plan would not be of sufficient size to make credible adjustments. Industry-wide or collar-specific tables are sometimes available, but these often miss significant variations, and only apply to the “average” within the industry plan. The Aon Longevity Model now allows sponsors to drill-down and make an allowance for the specific characteristics within their pension plans, irrespective of plan size.
Whether plan sponsors are considering the complete settlement of liabilities, are looking to insure against longevity risk or simply want to establish better long-term risk parameters, Aon can provide sponsors with a comprehensive view of their plans, participants and options to meet their specific needs.