UK - Mercer has launched a new interactive modelling tool called Mercer Provecta aimed at helping companies and trustees understand how increasing life expectancy will affect their defined benefit pension scheme liabilities.
The consultant said that it had analysed the initial results from mortality investigations by the actuarial profession and concluded that many pension scheme reserves for increases in life expectancy will be inadequate.
Existing funding programmes, which trustees will have agreed with their sponsoring employers, will therefore need to be reviewed and, in many cases, contributions will have to be increased to fund the longer period over which pensions will be paid, Mercer said.
Deborah Cooper, senior research actuary at Mercer, said: Mercer Provecta helps employers and trustees understand the cash flow impact of increases in future life expectancy for both their retired and non-retired members and also shows the impact on liability values. A key feature of the software is that it allows for variations in life expectancy by geographical location and by occupation.
She added: Mercer Provecta is interactive and easy to use. It will give trustees and companies confidence that scheme-specific factors have been assessed and, most importantly, will support strategies to manage longevity risks.
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