As we begin to enter in to a new age of mortality and longevity risk reaches 25% of the total risk associated with DB pension schemes, it is becoming undeniably important and necessary to proactively assess how these changes will affect those enrolled and vulnerable. Thus, according to the latest reports from industry experts, LCP, it is time for pension schemes to create and implement ‘made to measure’ mortality assessments in order to best account for and protect the scheme members.
The implications of longevity risk and mortality trends have been on the increase for some time and it is now more crucial than ever for pension schemes to be aware of their potential implications and the changing face of DB scheme membership. Pension scheme managers have the important goal of protecting those enrolled and looking after their best interests, and the changes that are afoot will certainly have a sweeping effect on the scheme member’s security.
The greatest challenge presented in this arena comes down to the long-term nature of both investments and pensions and how easy it is for mission critical levels of accuracy to be forgotten through time. As such, it is imperative to be ever attentive and stay ahead of the curve. Database record could be improved through the introduction of demographic profiling, establishing how members’ circumstances and behaviours may change, while also focusing on the probability of lifespan increases or decreases.
Mortality assessments, in combination with the right levels of understanding and continual review should become the modus operandi for pension schemes and the focus should be set firmly on drawing out the best possible outcomes for its members as the risk landscape continues to shift. The process of tracking predictive analysis for mortality remains an important tool for measuring the health of members and for tracking any changes that occur throughout time. The combination of individual data tracking, profiling and general data analytics will help to create a fuller picture of the situation at hand, allowing risk to better be predicted.
This is just one set of patterns that need to be taken into account when establishing the measures to ensure longevity. Pension schemes and their members must take all the necessary actions now to ensure that the right measures are in place to securely protect schemes over the long-term. Understanding mortality rates can become a valuable asset for schemes, allowing them to measure the success of its plans and uncover opportunities for improved security and the longevity of their members.