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How Has COVID-19 Impacted Canadian Defined Benefit Pensioner Longevity?

By Richard Brown, FCIA, FSA, CFA, Chief Operating Officer, Club Vita Canada

COVID-19 rapidly turned many aspects of our lives upside-down. For someone working in the fairly specialized world of longevity analytics, it was eerie and surreal to have the discussion of deaths and mortality quickly become so prolific throughout mainstream media. On one hand, all the reporting of COVID-19 cases, hospitalizations and deaths helped quantify what was happening but it also drew attention to the fact that the data and tools to gain a complete picture were lacking.

Traditionally there has been a lag of a couple of (or many) years between the latest data available for longevity analysis and when the results of the analysis are released, stemming from the time needed to compile, validate and analyze longevity data. This meant that throughout much of 2020 we didn’t have a clear picture of how COVID-19 was impacting overall Canadian mortality. We knew that there were significant numbers of deaths due to COVID-19, but we didn’t know exactly how this was impacting overall mortality due to a lack of up-to-date Canadian death data. Now, eighteen months after the pandemic reached Canada, we have a much better picture of COVID-19’s impact on Canadian longevity to date and also have an improved, albeit far from perfect, ability to investigate what the pandemic may mean for future longevity.

COVID-19’s impact on Canadian mortality to date

The chart below shows how Canadian total weekly deaths throughout 2020 and 2021 have compared to expected deaths[1], with the darker portion of each bar capturing deaths attributable to COVID-19[2]. Excess deaths occur when the bars exceed expected deaths. Over 2020, total weekly deaths exceeded expected deaths by 6.8%, with COVID-19 deaths accounting for much (approximately 75%), but not all, of 2020 excess deaths. The increase in Canadian deaths experienced in 2020 is significantly higher than any other year over the past 75 years[3], however it was still much lower than that experienced in the US and UK over 2020. In contrast, Canadian deaths over 2021 to late May (the latest data available at the time of writing this article for the majority of provinces) have only exceeded expected deaths by 3.9%. While 2021 started amidst the height of Canada’s second wave of COVID-19 infections and deaths, we see from the chart below that non-COVID-19 deaths were much lower than expected, which mitigated the impact of COVID-19 on the overall number of deaths.

Notes: Results shown exclude deaths for Manitoba for 2021 due to total actual and expected death data not being available.

While the chart above provides results for Canada as a whole, COVID-19’s impact on mortality over 2020 and 2021 has varied materially by province. Over 2020, Quebec experienced the largest excess deaths with an increase of 12.5% over expected levels (versus 6.8% for Canada), followed by Alberta at 8.1%. Over 2021 so far (again until May 22, 2021), Saskatchewan experienced deaths 12.5% higher than expected, followed by 9.2% for Alberta, both significantly higher than the 3.9% for Canada (and Quebec at 1.5%). Canada’s largest province, Ontario, experienced deaths 5.2% and 3.7% higher than expected over 2020 and 2021 through to May 22nd, respectively.

The table below outlines key factors influencing changes in Canadian mortality over the pandemic other than the direct effect of COVID-19 infections. 

COVID-19 vaccinations

The roll out of COVID-19 vaccines in 2021 supported the reduction of the spread of COVID-19 and significantly reduced the chances of severe outcomes, including death.

Increase in overdose deaths

Despite COVID-19 deaths being dominated by those at very advanced ages (i.e., 80+), younger ages experienced the largest increases in deaths over 2020. In fact, 2020 deaths were 21.3% higher than expected for those under age 45, 9.9% higher for those aged 45 to 64 and 5.6% for those aged 65 and older[4]. A substantial increase in overdose deaths was a key factor behind the large increases in mortality during 2020 for younger Canadians [5].

Exceptionally quiet flu season

Not surprisingly, the extensive restrictions introduced to slow the spread of COVID-19 also significantly mitigated the 2020/21 flu season and this likely contributed to non-COVID-19 deaths falling well below expected levels over the first few months of 2021.

Delayed medical procedures and treatment

While the postponement of medical procedures and delays in individuals receiving medical treatment has definitely been a key negative health outcome throughout the pandemic, it remains difficult to assess what impact this has had to date. 

Have defined benefit pensioners been protected from COVID-19?

All the statistics shown so far are based on the overall Canadian population, but participants of defined benefit (DB) pension plans are a unique subgroup of the population. A key question for DB pension plan sponsors is then: how has COVID-19 impacted mortality for DB pensioners? The chart below provides an analysis of how 2020 DB pensioner monthly deaths, based on Club Vita’s preliminary data for pensioners (including surviving spouses) residing in Ontario, compared to the five preceding years. The green line provides a seasonality adjusted trend for deaths over 2015 to 2019, which is extrapolated to 2020. We see that there was a sizable increase in deaths above the trend during April 2020, and smaller increases in May and December 2020. For all of 2020, Club Vita’s Ontario DB pensioner deaths were 3.2% higher than that expected based on the 2015-19 trend. In contrast, Club Vita estimates the corresponding statistics for the Ontario population aged 65 and older to be 4.7%, suggesting that the Ontario general population experienced a larger relative increase in deaths over 2020 than that of DB pensioners.

The analysis provided above focuses on Ontario DB pensioners because they make up the largest provincial grouping within Club Vita’s Canadian dataset. A single province was chosen given the material differences in the impact of COVID-19 on mortality by province during 2020. The lower relative increase in deaths for Ontario DB pensioners is believed to be driven by differences between the geographic and socio-economic profile of DB pensioners versus the general population.

Potential future longevity implications of COVID-19 for DB pension plans 

While the increase in deaths caused by COVID-19 has been substantial, in isolation the impact of the heightened mortality to date on DB pension plan liabilities is likely to be quite small. It is what happens in the years to come that could really influence DB pension plan obligations and this is why in March 2021 Club Vita released a set of future longevity scenarios built around different possible pathways for the pandemic. The scenarios consist of two extreme scenarios (Healthcare Decline and Innovation in Adversity) and two more central scenarios (Bump in the Road and Long Road to Recovery). The future COVID-19 longevity scenarios are summarized as follows: 

Bump in the Road

Long Road to Recovery

Healthcare Decline

Innovation in Adversity

  • An effective roll out of vaccines results in a swift recovery from the pandemic

  • A marked increase in deaths in 2020 and 2021 is followed by deaths largely returning to a pre-pandemic trajectory, but with a couple of “lost-years” of improvements
  • Challenges to efficacy and take-up of vaccines result in the pandemic having a prolonged effect

  • COVID-19 related excess mortality continues through first half of 2020s

  • Longer term disruption to non-COVID-19 medical services lead to low levels of improvements in 2020s and 2030s

  • Lower socioeconomic groups hardest hit
  • Initial optimism around vaccines proves unfounded – adverse publicity limits take-up and new mutations limit effectiveness

  • Persistent waves of COVID-19 mortality through 2020s

  • Healthcare systems overwhelmed by each wave

  • Massive disruptions to non-COVID-19 medical treatments with no periods of catch up possible
  • Effective roll out of vaccines results in a swift recovery from the pandemic

  • A ‘V-shaped’ economic recovery allows a catch-up in lost years of improvements

  • Lessons learned act as a catalyst for longer term improvements – directly from medical advances and indirectly from efforts to address health inequality

The scenarios were developed around four key drivers, with the table below providing commentary on each driver, considering what the experience over the past six months may mean for each driver.

Key driver

Potential implications of evolution of the key driver over the past six months

Immediate increase in deaths due to COVID-19

After a slow start, Canada became a leader in vaccine take-up rates, with vaccines being highly effective. The success of COVID-19 vaccines means that 2021 excess deaths for Canada (as a whole) are currently on track to be moderately less than originally contemplated in Club Vita’s future longevity scenarios. However, this varies materially by province and there is still a risk that COVID-19 deaths increase as we progress through the fall and winter months – we’ve already seen a concerning increase in COVID-19 deaths in Alberta through late August and September.
COVID-19 appears to be heading toward becoming endemic, but it is unclear when this may be reached. However, if new variants continue to pose challenges and/or vaccine effectiveness diminishes, this could cause elevated levels of mortality to persist.

Disruption to non-COVID-19 medical care

It is still much too early to tell the full impact of the pandemic on non-COVID-19 care, both in terms of the implications of what has happened to date and how disruptions may continue going forward. However, despite the progress in the fight against COVID-19, healthcare systems continue to be strained, with the burnout of healthcare professionals being a serious issue. In addition, the potential for increased cases and hospitalizations as we approach the winter months poses the risk of continued disruptions to care.

We know that the focus on treating COVID-19 has taken attention away from certain other treatments, with emerging research into key causes of death such as cancer[6] and heart disease providing the ability to better quantify the pandemic’s implications for future longevity.

Changes to health and care systems

The pandemic resulted in a series of promises around improvements to the health and care systems, in particular for long term care. Whether or not those promises will come to fruition and the impact they would have remains quite uncertain.

The healthcare system faces a number of headwinds, such as an explosion of costs, labour challenges and the continuing increase in health care needs due to COVID-19, including Long COVID[7]. However, there are also many potential tailwinds beyond political promises, including the swift move to embracing telemedicine and other technological and medical advances, particularly mRNA technology[8].

Global recession

The Canadian economy has been fairly resilient to date. Real gross domestic product (GDP) grew by 9.1%, 2.2% and 1.4% in Q3 2020, Q4 2020 and Q1 2021 respectively[9], more than offsetting the 11.3% drop in Q2 2020. This pattern has also been seen in Canada’s largest trading partner, the US. Whereas this does not guarantee a resilient economy in the long term, the current indicators are positive.

At the current time, it seems that the worse case COVID-19 scenarios are not materializing. However, there is still a long way to go before we will have a full appreciation of the aftereffects of the pandemic on longevity, both for the general population and for unique sub-populations such as the participants of specific DB pension plans. Monitoring the emerging data to see the early signals remains as important as ever.

Richard Brown, FCIA, FSA, CFA, Chief Operating Officer, Club Vita Canada Inc.

Richard oversees Club Vita Canada’s longevity modelling and research, as well as its broader operations and delivery of longevity analytics. Richard collaborates closely with his UK and US colleagues on international longevity research and other Club Vita international pursuits.

Previously, Richard spent over ten years providing investment strategy and broader risk management consulting services, focused on the analysis, design and implementation of pension risk management strategies.

Richard is a regular contributor to Canadian longevity thought leadership by way of articles, speaking engagements and participating in Canadian Institute of Actuaries’ longevity-related initiatives.

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