Pensions - Articles - DB schemes must understand health trends impacting longevity


The findings from two recent reports into the NHS points towards a likely continuation of the modest longevity improvements seen over the 2010s and suggests that the indirect effects of the pandemic will continue to be felt over the short-medium term, according to LCP.

 Lord Darzi’s independent review, published earlier this month describes the NHS as being “in serious trouble”, citing long waiting times, reduced productivity, and low patient and staff engagement. The Institute for Public Policy Research (IPPR)’s report, ‘Our Greatest Asset’, describes the UK as the “sick man of Europe” and recommends shifting health policy from a sickness model to one of health creation.

 LCP suggests that it is likely that the challenges that the NHS is facing are not only impacting patient experience but resulting in increased mortality through longer waits for treatment, worse population health and reduced economic productivity. They are urging schemes to consider how the wider holistic picture of public health in the UK can impact mortality trends and the need for insight that brings together actuarial knowledge with clinical insights.

 LCP say there are three top actions for pension schemes to bear in mind when considering longevity assumptions:

 1. Stay informed of latest trends in public health. In an uncertain environment, it is important to understand the possible drivers for future changes in mortality, some of which are discussed in our latest longevity report.

 2. Consider your scheme’s membership. The continued effects of the pandemic and the UK’s current health challenges are not being felt equally across the population. Mortality assumptions should take account of the socio-economic profile of your scheme’s membership where possible.

 3. Engage with advisors. Actuarial models for mortality are becoming more complex, with increasing user choice over parameters. Our advice, informed by insights from our Health Analytics department, pragmatically helps clients choose the most appropriate assumptions for their schemes.

 LCP partner and longevity specialist, Ben Rees, commented: “The pandemic and the ongoing pressures on the healthcare system have significantly disrupted mortality trends. This has consequences for managing a pension scheme and solely relying on traditional actuarial methods to predict future mortality trends no longer works.

 “Understanding the trends and drivers for future changes in mortality means trustees and sponsors will be able to make more informed judgments on the future of their own DB scheme.”
  

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