As society’s view on gender identity continues to evolve, so too does the role of gender in shaping the world.
A 2023 report by the Canadian Institute of Actuaries examined the impact of gender on actuarial considerations, including longevity risk in pension plans. The CIA’s report followed a 2021 decision by the Superior Court of Quebec that highlighted the difference between sex and gender identity and resulted in legislation that allows individuals to replace the sex at birth on identification documents to ‘M,’ ‘F’ or ‘X’ to better express their gender.
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In 2021, Statistics Canada reported there were 100,815 transgender and non-binary Canadians aged 15 and older, representing 0.33 per cent of the population in that age group. While actuaries have typically used the assumption that women live longer than men, the full impact of individuals who identify as transgender or non-binary on longevity is yet to be determined as more data is gathered, says Dominic Bourbonnais, an actuary with Arthur J. Gallagher & Co. and chair of the CIA’s designated group on gender identity, which produced the report.
“The assumption [of the longevity of transgender or non-binary plan members] is that it would be something in between [male and female]. For example, if you’re transgender and transitioning from male to female, you wouldn’t necessarily have the same life expectancy as a female, probably a bit shorter. At this point, we don’t necessarily have as much to work on.”
“[Gender identification] doesn’t necessarily require a change in hormones or surgery. It’s really a spectrum — it’s not one size fit all.”
Gender identity by the numbers
In 2021, Canada was the first country to collect and publish data on gender diversity in a national census.
Of the nearly 30.5 million Canadians aged 15 and older living in a private household in May 2021, 100,815 were transgender (59,460) or non-binary (41,355), accounting for 0.33% of the population in this age group.
The proportions of transgender and non-binary people were three- to seven-times higher for generation Z (0.79%) and millennials (0.51%) than for generation X (0.19%), baby boomers (0.15%) and the interwar and greatest generations (0.12%).
Source: Statistics Canada
Predicting mortality
According to the CIA’s report, pension plans’ actuarial valuations are typically performed on a sex-distinct basis, which means the actuary assigns male/female sex-at-birth mortality rates in assessing values for plan members reported to the actuary as male/female.
However, it noted there’s growing awareness that sex at birth may not align with a plan member’s identified gender and it’s typical practice in the pension industry to use the two interchangeably. In the long term, the report found additional predictors, such as career and postal code, may need to be more heavily relied upon as indicators of mortality risk in determining actuarial valuation. However, it noted sex currently plays a much more significant role as an indicator of mortality risk.
In terms of commuted values, pension legislation in all provinces other than Quebec requires that a commuted value not differ based on a member’s sex; therefore, commuted values in jurisdictions other than Quebec are determined on a unisex basis.
The report noted a common approach to determining a plan’s unisex basis for the purposes of commuted value administration is calculating the ratio of male or female solvency valuation liabilities eligible for commuted value payments to total solvency liabilities eligible for commuted value payments. If the solvency valuation would be performed on such a unisex basis for the subset of members eligible for commuted value payments, the results would be virtually the same as when the valuation is performed on a sex-distinct basis, said the report.
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“On the pension side, nothing is going to change overnight, because the legislation is set up in a way that the person identified doesn’t have an impact,” says Bourbonnais. “In the valuation side, we have more ability to take into account the mortality of the group, but on the commuted value, it’s the same mortality table for everyone.”
Availability of data
While plan members’ gender information is currently readily available, the CIA’s report examined the possibility that this information may be difficult to come by, depending on applicable legislation and case law.
In the event that actuaries won’t have sufficient gender in-formation to determine an appropriate unisex basis, the report suggested the average mortality rate for males and females could be used as the baseline. However, by using this as a baseline, it noted, a group that’s predominantly male would see increases to commuted values while the opposite would be true for a group that’s predominantly female.
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“Gender is only one data point [and] what has changed is how you can ask [for a person’s gender] — asking for gender is probably safe, but labeling sex at birth can be viewed as offensive by someone who’s transitioning or who identifies as non-binary,” says Bourbonnais. “It’s more about communication and how you request the information.”
Blake Wolfe is the managing editor of Benefits Canada and the Canadian Investment Review.