## The limits of limits

Is there a limit to life expectancy?  Oeppen and Vaupel (2002) wrote a very succinct article in which they stated the problem:

"Is life expectancy approaching its limit? Many — including individuals planning their retirement and officials responsible for health and social policy — believe it is. The evidence suggests otherwise."

Oeppen and Vaupel, Broken limits to life expectancy, Science, May 2002

Has anything changed since Oeppen and Vaupel wrote this in 2002?  In terms of mortality rates, the answer is no — mortality rates have continued to fall, especially at post-retirement ages.  Unfortunately, there has only been modest progress in terms of the other problem Oeppen and Vaupel addressed, namely the tendency for experts to presume knowledge of the limit to life expectancy:

"experts have repeatedly asserted that life expectancy is approaching a ceiling: these experts have repeatedly been proven wrong."

Oeppen and Vaupel, Broken limits to life expectancy, Science, May 2002

Oeppen and Vaupel's article should be required reading for every pension-scheme trustee, insurance-company board member and, of course, actuaries.  In a simple, two-page article they show how those who believed in limits to life expectancy (or mortality rates) were proved wrong, on average around five years after publishing the claimed "maximum" life expectancy.  Oeppen and Vaupel even recount the example of an unfortunate researcher whose limit for life expectancy was breached before he published it.

What does this mean for trustees, investors and board members in practice?  First, beware of any projection model which has any built-in assumptions for the maximum life expectancy, or the maximum extent to which mortality rates can improve.  As Oeppen and Vaupel showed, such assumptions have invariably been wrong in the past.

Secondly, trustees, investors and board members must be wary of subjective assumptions in general, even when chosen by an expert.  The history of experts' judgement on limits to life expectancy shows that they under-estimate improvements in life expectancy.  And, as ever, beware of models telling you what you want to hear.

Albert Jürgen Enders
(May 18, 2011)
This is a topic we also look very carefully. For our pension scheme analysis and our generation life table we set a mximum age of 120. At looking to the amount of survivors (lx) forcasted with a realsitic mortality improvement rate there will not many survivors over age 110 - even in the younger cohorts.

Nevertheless, we had a chat some years ago and the board member of a reinusrer tols us that they prdeict that there a people already alive who will become age of 150 !!!

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Stephen Richards is the Managing Director of Longevitas