Money - Family. Life Annuity: What is the "mortality table"?

Certain investments such as life insurance, the Retirement Savings Plan (PÉR) or the Equity Savings Plan (PEA) allow the saver to withdraw money in the form of a life annuity, rather than in capital.

This annuity is therefore paid to the subscriber until his death, which can significantly improve a retirement pension.

When it comes to withdrawing an annuity, your financial institution (insurance or bank) must convert the capital to calculate it.

The formula is a priori simple: simply divide the amount of capital by the number of annuity payments.

Except for one thing: in the case of a life annuity, it would be necessary to know the date of death of the insured, which is by nature impossible.

The insurer must therefore estimate it. To do this, it uses a mortality table. This table is established by INSEE, which defines it as follows: "An annual mortality table follows the path of a fictitious generation of 100,000 newborns who are subjected at various ages to the mortality conditions observed in the various real generations during the year studied. To avoid the vagaries of annual tables and to have a detailed table by age as accurate as possible, a mortality table covering a period of three years is also calculated."

Thus regularly re-evaluated, the table therefore makes it possible to estimate, according to the year of birth, the life expectancy of an individual at each age.

According to the latest data, a woman born in 1960 has a life expectancy of 23.44 years at the age of 65.

If she wishes to withdraw from her SRP in the form of a life annuity, the insurer will therefore divide her capital by 23.44. Assuming that her capital is €100,000, she will therefore receive €4,266 in annuity per year.

Until recently, insurers differentiated their tables by gender. However, as we know, women have a higher life expectancy than men.

By comparison, a man born in 1960 has a life expectancy of 21.23 years at age 65. With the same capital, his pension is €4,710 per year.

A significant and unequal difference. Since 2013 for individual contracts and 2024 for collective contracts, gender tables have been abandoned.

Only a mixed table remains, in which life expectancies are weighted for each of the two sexes. On average, it is estimated that women's pensions will increase by around 8% while men's will be reduced by 5%.

This question of the mortality table should not remain foreign to you when signing your savings contract.

On the contrary, you must be vigilant about its use. Will the insurer take into account the table in force at the time of contracting or the one that will be in force at the time of payment of the annuity?

Given the increase in life expectancy, the second option is therefore less attractive (since your capital will be divided by a greater number of years).