Leader: Reassessing longevity
Swiss Re’s recent report on longevity argues that current methods of estimating life expectancy fail to take into account important trends and developments. It suggests a new approach to understanding mortality, using the expertise of actuaries, medical experts, demographers and governments, would provide a more accurate longevity picture.
This month, Retirement Strategy catches up with the report’s author Daniel Ryan to hear his views on the implications of a reassessment of longevity estimates for product design and the advice industry.
Ryan suggests that in the past, longevity assumptions have failed to take into account important one-off factors and have led to an underestimation of life expectancy levels.
Governments, employers and insurers have all suffered in recent years as a result of this underestimation which has obviously had a knock-on effect for individuals expecting certain levels of state support, employer provision and/or annuity income.
The issue of longevity goes to the heart of the service clients expect from their IFA they want to accumulate enough wealth and protect themselves to ensure they can expect a certain standard of living until they die, no matter what the future holds. Rising longevity assumptions has been a leading driver of some of the product innovation we have seen recently as providers look to offer solutions which take into account longer periods of retirement and the differing needs of clients as they move through retirement.
In this month’s issue, The Retirement Partnership director Billy Burrows looks at the implications of continuing annuity rate falls. Burrows suggests that although a lifetime annuity remains the preferred option for many investors, factors such as falling annuity rates and rising longevity mean flexible annuity solutions are becoming more popular.
Elsewhere in this issue, Rachael Adams interviews Friends Life chief executive Andy Briggs about the rationale behind the providers recent restructure which saw it split its operations between open book and closed book business. He also outlines why Friends Life, along with every other provider it seems, sees huge opportunities in the group market.
As usual, any comments of suggestions for future issues should be sent to firstname.lastname@example.org.