How long can USS members expect to live?

By Professor Kevin Dowd, August 2022

How high are Universities Superannuation Scheme members’ mortality rates, and what does that mean for the future? Professor Kevin Dowd and his colleagues investigate. 

My mortality modelling colleagues and I have just had a paper ‘A general framework for analysing the mortality experience of a large portfolio of lives: with an application to the UK Universities Superannuation Scheme’ published by the European Actuarial Journal.  

I admit the title doesn’t slip off the tongue. I preferred the earlier title ‘Professors are made of sturdy stuff’. The authors are Andrew Cairns (Heriot-Watt), David Blake (City University), yours truly, and Guy Coughlan, Owen Jones and Jeffrey Rowney from USS.  

Our study compares the Universities Superannuation Scheme (USS) ‘mortality experience’ (i.e. the ages members died) with English mortality experience subdivided into deprivation deciles using the Index of Multiple Deprivation (IMD). By English, I really mean English and Welsh, but not Scottish. Don’t ask why ‘English’ includes Welsh but not Scottish: the reasons are lost in the mists of actuarial time. The main finding is that USS members had significantly lower mortality rates than even IMD-10, the least deprived or most affluent 10% among the English general population.  

In plain English, we (USS members) have better ‘mortality experiences’ and by implication, are likely to live longer than well over 90% of the general population for any given current age. This is good news, up to a point. 

How do we explain this finding? We don’t, but I can hazard a partial guess. USS members are more affluent and more educated than most people, and higher affluence and education are known to be associated with lower mortality rates. The rest is speculative, but perhaps academics’ better mortality experience so far might also be associated with lower stress levels… at least in the distant past. Personally, however, I’ve never once in the last 30 years met a single good academic who wasn’t seriously stressed.  

I mentioned that our results are good news up to a point. Why the qualifier? Part of the answer is that it’s not good news for us/USS if we all live too long. If we live long enough, then USS (and any other pension fund) will go bust, which wouldn’t be good news for us either.  

No one knows what would happen then, but three possibilities come to mind.  

The first is that taxpayers step in and bail us out, but I wouldn’t count on younger tax-paying people being too keen to bail out an affluent older group who had it good for all these years.  

Second, there could be some situation where we/USS members see our pensions cut as part of a more general misery-sharing exercise. That’s usually what happens in such circumstances.  

Or, third, we might lose our pensions altogether (if current Financial Services Compensation Scheme rules still apply), get a cheque in the post and be told to sort our own pensions out when we’re in our dotage. In that case, we can at least expect some pensions salespersons to be waiting at the care home or our own front doors looking to take advantage of our situation.  

But all this is just a small part of a much bigger problem, namely, that both private and public pension funds across the world are seriously underfunded and have been for decades, and no one anywhere is doing anything to seriously address this problem.  

More information on Professor Dowd's research interests.