Did you know that longevity has changed differently for different groups of pensioners?
Since 2011 longevity has changed little for lower income pensioners, but has continued to increase (by over 6 months every 5 years) for the wealthiest pensioners.
This is important as pension scheme liabilities tend to be concentrated amongst these wealthiest pensioners. So underestimating how fast longevity is increasing for this group could lead to unexpected funding deficits in the future.
In June 2017, the PLSA, in collaboration with Club Vita, published an update to their research on Longevity Trends. This report is written for trustees of pension schemes to give you all the information you need on how the longevity of pensioners has been changing.
Why should you read this update? The approach used for estimating longevity changes in pension schemes is often simple and generic. For example, it is typical to assume that longevity will change in the same way for all pensioners even though we know that is not the case. The update will show you how it is possible to do better and reflect the differences in longevity patterns seen between your lower income and wealthiest pensioners.
The Pensions and Lifetime Savings Association (PLSA) and Club Vita LLP (CV LLP) have provided to the UK pensions industry both an understanding of how differently longevity has been improving for different groups of defined benefit (DB) pensioners (such as those at different ends of the deprivation spectrum) and materials that pension schemes, and their advisors, can use in practice to better inform the assumptions that are adopted for longevity trends (together, the "Research"). The Research is based upon the PLSA and CV LLP’s understanding of legislation and events as at June 2017 and therefore may be subject to change. The Research is the PLSA and CV LLP’s understanding of how longevity has been improving for different groups of DB pensioners and is not, nor is it intended to be, specific to the circumstances of any particular pension scheme.
The information contained in the Research is therefore not to be construed as advice and should not be considered a substitute for specific advice in relation to individual circumstances and should not be relied upon. Where the subject of the Research refers to legal matters please note that neither the PLSA nor CV LLP are qualified to give legal advice therefore we recommend that you seek legal advice. Neither the PLSA or CV LLP (nor their respective licensors) accept liability for errors or omissions in the Research and neither the PLSA or CV LLP (nor their respective licensors) owe nor shall accept any duty, liability or responsibility in regards the use of or reliance upon the Research except where we have agreed to do so in writing.
© 2017. The Research contains copyright and other intellectual property rights of the PLSA and/or CV LLP and their respective licensors. All such rights are reserved. You shall not do anything to infringe the PLSA or CV LLP’s or their licensors’ copyright or intellectual property rights. However you may reproduce any of the charts and tables contained in the Research and quote materials from this report, provided the source of the material is clearly referenced by stating "Reproduced with permission from the Pensions and Lifetime Savings Association (PLSA) and Club Vita LLP (CV LLP). You must not rely on this material and neither PLSA nor CV LLP accept any liability for it.".
If you are seeking to use the information contained in the Research sometime after it was produced then please be aware that the information may be out of date and therefore inaccurate. Please consult the PLSA and Club Vita websites for updates or contact firstname.lastname@example.org.
The PLSA Longevity Model sets out analysis that demonstrates that different socio-economic groups each experience different longevity trends. To try our Longevity Trend Group Finder Tool (to find the VitaSegment for a particular postcode and pension) just click on the left hand menu.
To understand how your scheme membership breaks down into these groups, find the IMD quintile value (where IMD quintile 5 refers to the highest level of deprivation and IMD quintile 1 refers to the lowest level of deprivation) for each member using the postcode data that you hold and the list accessible through the link below. For males you will also need to assign a pension amount grouping for each individual (one of <£5k, £5k - £7.5k,>£7.5k), measured as at July 2013.
Note that we are unable to provide postcodes directly for Northern Ireland. In this case please use the LSOA to determine the appropriate IMD Quintile. This Zip file contains:
Postcode and LSOA code were sourced from the Office of National Statistics website for August 2013.
Where a postcode is not included, the postcode either belongs to an LSOA code which was not present in the data set used to create the adjusted IMD index or is a Northern Ireland postcode for which the data falls under a separate licensing agreement.
If you are experiencing issues mapping your membership’s postcodes please contact Club Vita for assistance.
In the original report, published in 2014, you can read about the first investigation into changes in longevity of pensioners over the period 2000-2010.
Supporting the original 2014 report and subsequent 2017 report, are a series of technical appendices providing more detail on the analysis used in the reports.
The original technical appendices can be obtained here and the updates in respect of the 2017 report will be available here shortly. These should be read together.
The appendices are written with an informed audience in mind and are designed to provide confidence in the rigour of the research and the necessary supporting documentation. It will be a valuable tool for Scheme Actuaries, corporate actuaries and longevity consultants in informing advice.
However, we would encourage other interested readers to not be put off looking at the Technical Appendices. For those readers that are interested in digging a little deeper into the details, there are two documents you might read:
If you would like to request printed copies of the Appendices, Frequently Asked Questions or Guide to Scenarios or for any other enquiries please contact Steven Hood.
See here for Reliances and Limitations.
Gender, affluence, occupation and lifestyle - four major factors that significantly influence our individual longevity. Just move the sliders to see how long Mr (or Mrs) Predictor's longevity is affected.
*Please note - Mr Predictor's just a bit of fun. Determining longevity is a complex affair and there's a lot more to it than these simple things. If it was as easy as that, we'd be out of business.
With life spans rising at a rate of 2.5 years per decade, and no sign of this growth slowing down, we all know longevity is a big issue for pension schemes, but opinions are hugely divided on the best way to tackle it. Our guide introduces both sides of the argument:
Either way, it’s crucial to be well informed on the options available and to have enough information on your members to make the best, informed, decisions for your scheme.
To download the full guide - please click here
Gender, affluence and lifestyle - three major factors that influence longevity improvements. Just move the sliders to see which longevity trend group Mr (or Mrs) Predictor is in.
The PLSA's Longevity Model, powered by Club Vita, can aid Trustees in their approach to setting a longevity trend assumption which is tailored to the scheme. Men and women of different affluence and lifestyle experience different longevity trends. Those who experience similar longevity trends have been grouped and this tool can help you understand which members will be in which longevity trend group. If you would like to map your full scheme’s membership to the NAPF Longevity Trend Groups please contact Club Vita for assistance.
*Please note - Mr Predictor's just a bit of fun. Determining longevity is a complex affair and there's a lot more to it than these simple things. If it was as easy as that, we'd be out of business