Watson Wyatt is warning against the dangers of trustees following The Pensions Regulator’s revised mortality assumptions saying it will not guarantee all risks are covered.
The Pensions Regulator said this week that it intends to consult on the introduction of a new trigger for pension scheme valuations based on mortality assumptions.
Watson Wyatt senior consultant James Wintle says: “The danger in blindly following the Regulator’s trigger points is that trustees and sponsors could be misled into believing that by funding at this level all mortality risks are covered.
“In reality it is still quite possible that either significant surpluses will emerge or that further strengthening of the assumption will turn out to be necessary at future valuations.
“The important point for trustees and sponsors of pension schemes alike is to understand the uncertainty that exists around future levels of mortality and to review sensitivity calculations that illustrate the scenarios considered most plausible by the experts.”