LEBC Group says it has developed new software to more accurately predict life expectancy which could reduce firms’ pension liabilities by millions of pounds.
The group says reviews of occupational pension liabilities that it has carried out for seven firms so far, including Scottish broadcaster STV’s Caledonian Publishing pension scheme, looks set to save the companies more than £12m.
STV and the six other firms, which cannot be named, had previously been using national averages to calculate their liabilities.
LEBC’s software uses information on the health and lifestyle of scheme members, already used by underwriters but not previously collected by the companies, and compares it to market annuity rates for people with similar situations to more accurately estimate life expectancies.
LEBC claims that similar reviews carried out across all FTSE 250 companies could cut £1bn of liabilities from their balance sheets.
LEBC longevity director Nick Flynn says: “This ends the guessing game around scheme mortality by actually establishing the health of the membership and confines today’s post-code based approach to history. Ultimately, this approach provides actuaries with a far more accurate base of evidence to base future assumptions on.
Chief executive Jack McVitie (pictured) says: “Organisations are increasingly looking to identify effective ways to fund future scheme liabilities and, in the current financial crisis, many are even finding it hard to secure the cash required to pay their ongoing scheme contributions.”