Inside Money: Long life is a gift (or how to collect your mortality credits)

Merry Christmas kids! Photo / iStock

David Chaplin is the editor of financial services industry website Investment News.

One Christmas, when I was still a boy, we tagged along with my mother to her day shift at the Russell Kemp nursing home in Titahi Bay.

As I recall, only three people died that day. I have a vivid memory of helping shift at least one body from the bed to a gurney - my first close encounter with a corpse.

Frankly, I'd imagined Christmas Day panning out a little differently: riding my new bike, eating chocolates, sleeping in the afternoon... But in hindsight the experience is probably one of the many gifts I should thank my mother for, but haven't.

So, yeah, you know, thanks Mum.

That Christmas I began to learn mortality is an ordinary business, with certain logistical challenges. Since then, I'm sorry to say, further evidence has stacked up.

But as David Knox, senior actuary at Mercer Australia, told delegates at the recent Workplace Savings NZ (WONZ) conference in Wellington last week, mortality isn't what it used to be.

There is, in fact, a death deficit. Or to put that in a positive frame, people are living longer.

Actuaries, who are professionally unsentimental about death, worry about longevity. The principal problem, actuarially speaking, is how are we going to pay for all this oldness?
Knox was pitching one longevity-funding solution to the WONZ crowd. In Australia Mercer recently launched a product called LifetimePlus, which he described as the "only group self-annuity" on the market.

Knox also called LifetimePlus a "longevity pooling" product. Both descriptions are probably not that helpful to average consumers. But, in brief, people who buy into a 'group self-annuity' are guaranteed a certain amount of income for life. Exactly how much income individuals receive over time will vary depending on their initial capital and the longevity of each member of the pool: past a certain threshold age those who die earlier will have their remaining capital redistributed to survivors, who will reap what Knox called a "mortality credit".

The phrase, of course, horrified the Mercer marketing department, who reconfigured it as a more consumer-friendly "living bonus".

Knox said Mercer might roll out LifetimePlus in New Zealand. But I don't know how I'd feel about buying Mum one for Christmas.