The narrative that Canadians are living longer has been largely true for the past 100 years, and in the public consciousness for perhaps the last 40. It is the main reason given for why we should save more for retirement and retire later. It is also why Stephen Harper’s government felt that Old Age Security pensions should start at 67, rather than 65.
That narrative, however, is shifting. Whether one measures life expectancy from birth or from age 65, the number has plateaued. When measured from age 65, life expectancy in 2023 was virtually the same as it was in 2016. When measured from birth, it was actually lower in 2023 than it was in 2012.
When an important long-term trend suddenly reverses, it is natural to wonder why. The following reasons represent my personal views on this subject, supported by statistics, where available.
COVID-19 was one obvious factor contributing to stalled longevity, but it only explains the dip in life expectancy in 2021 and 2022.
Another factor is that, for many years, medical advances have prolonged lives. But perhaps that low-hanging fruit has already been picked, and further increases in longevity will be harder to come by.
The increasing use of opioids in recent years – especially fentanyl – is also leading to younger deaths. There were 7,146 toxicity deaths in 2024, and while this represents just slightly more than 2 per cent of all Canadian deaths during this period, those affected were younger, in age groups where mortality rates are usually low.
There’s one last possible reason mortality rates have climbed – and life expectancy gains have stalled – since 2016. It was in that year that Canada legalized euthanasia by passing Medical Assistance in Dying. MAID now accounts for one death in every 20 in the country, and while there’s no way to know exactly how much longer people would have otherwise lived, it’s possible that it is contributing to the longevity changes we are seeing.
In spite of these demographic headwinds, my best guess is that life expectancy will resume its upward trend, but more slowly than was the case before 2015 and more slowly than demographers and actuaries would have expected a few short years ago.
If so, it means that life annuities are currently more expensive than they should be, since insurance companies build future improvements into mortality assumption when determining pricing, and may have built in more than they should.
It may also mean that the cost of Canada/Quebec Pension Plan benefits may drop if the future improvements in mortality baked into the actuarial assumptions don’t materialize. Perhaps we’ll even see a small break in the contribution rate in the not-too-distant future.
Frederick Vettese is former chief actuary of Morneau Shepell and author of the PERC retirement calculator (perc-pro.ca)