How long do Australians live? It’s not just a matter of curiosity—it’s a pivotal calculation underpinning billions of dollars in superannuation, life insurance, and government policy. Welcome to the world of the underlying mortality assumption: the actuarial guesswork that quietly shapes your financial future.
What Is the Underlying Mortality Assumption?
The underlying mortality assumption is an estimate used by actuaries and financial institutions to predict the average lifespan of a population. It’s the statistical backbone for pricing life insurance, designing retirement income streams, and setting aside reserves in super funds. In 2025, with Australians living longer than ever and new health data emerging post-pandemic, these assumptions are being closely scrutinised and updated.
In practical terms, if a super fund expects its members to live to 90 instead of 85, it needs to ensure that retirement income lasts those extra five years. On the flipside, if insurers expect shorter lifespans, premiums could rise for certain products. The ripple effects touch every Australian’s wallet.
Why Mortality Assumptions Matter: Real-World Examples
- Superannuation Pensions: In 2025, APRA’s latest review pushed super funds to update their longevity models based on recent ABS data, which showed life expectancy for Australians at birth now exceeds 83 years. Funds like AustralianSuper have responded by tweaking pension product pricing and member guidance.
- Life Insurance Premiums: Major insurers, including TAL and AIA, have adjusted their premium structures this year, reflecting updated mortality tables. For example, non-smokers aged 40-55 saw a modest decrease in premiums, while older cohorts faced increases as longevity expectations shifted upward.
- Government Policy: The Federal Government’s 2025 Intergenerational Report highlighted the impact of rising life expectancy on the Age Pension and health budgets. This has triggered consultations about gradually increasing the preservation age for superannuation access and adjusting pension eligibility criteria.
Key Drivers of 2025 Mortality Assumptions
The assumptions used by actuaries in 2025 aren’t set-and-forget. Here’s what’s influencing the numbers this year:
- Post-COVID Health Trends: Australia’s mortality rates dipped during the height of the pandemic (due to reduced flu and accidents), but 2022–2024 saw a catch-up effect, with ABS reporting excess deaths from delayed medical care. This volatility forced funds and insurers to revisit their projections.
- Medical Advances: Breakthroughs in cancer and cardiovascular treatments have increased the odds of living past 80, especially for women. Actuaries are now building these trends into their models.
- Socioeconomic Disparities: Life expectancy still varies sharply by region and income. In 2025, regulators are pushing for more granular, cohort-specific mortality assumptions rather than one-size-fits-all averages.
How Mortality Assumptions Affect Your Financial Decisions
For everyday Australians, these actuarial tweaks are more than academic. They directly impact:
- Superannuation Drawdown Rates: If your fund expects you to live longer, it may recommend lower annual withdrawals to stretch your nest egg.
- Retirement Planning: Financial planners are now modelling retirement income to age 95, not 85, reflecting updated assumptions. This means recalibrating how much you need to save and when to retire.
- Insurance Choices: With rising life expectancy, term life policies may offer better value for younger, healthier applicants, but older Australians could face steeper costs or policy exclusions.
It’s more important than ever to review your super, insurance, and retirement plans in light of these evolving assumptions.
The Bottom Line: Staying Ahead of the Curve
Underlying mortality assumptions may sound dry, but they quietly shape the cost and security of your financial future. In 2025, with Australians living longer and the data landscape shifting rapidly, it pays to understand how these assumptions influence your super, insurance, and retirement outcomes.
