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Employer  >  Trustee Zone  >  OPS Matters  >  TPR Consult on Mortality Assumptions

TPR Consult on Mortality Assumptions

The regulator has just issued a consultation document on 'Good practice when choosing assumptions for defined benefit pension schemes with a special focus on mortality'.

What the consultation document basically says is that, in the regulator's opinion, some mortality assumptions that have been and are still used to value scheme liabilities haven't been as 'prudent' as they should be. In essence, trustees should be using more up to date assumptions that take into account the fact that people are living longer and that the upward trend will continue for longer.

As a result, they are proposing that they will undertake further analysis and question trustees about recovery plans where they feel the mortality assumptions are weaker than those which are not in line with latest developments.

This is a highly specialised and complex area so the regulator stresses that although 'Trustees need to own the assumptions on mortality', professional actuarial advice will be essential so that it can be explained properly.

It's highly likely that these proposed changes in the assumption basis will mean that DB scheme liabilities will increase, potentially leading to increased costs to employers.

The consultation runs from 12 weeks from the date of publication - 18 February 2008 - responses should be made to the address or email address stated in the consultation document.