Life expectancy is complicated to evaluate, and we have observed that planning for a range of outcomes remains a blind spot for many defined benefit schemes. In general, it is believed that life expectancy will increase, but on what technologies or breakthroughs does this depend, and what are the trajectories of these? And if life expectancy does increase, there are questions over whether it will happen gradually or in sudden jumps, and also how widespread the effect will be. Will new life-extending technologies be available for only the fortunate few who can afford it, or will it be available for all via the NHS?
To answer these questions, we need to look deeper than simply what the technology will enable, and consider the wider world in which this technology will exist. We have developed a perspective on four potential scenarios of the future, depending on how innovative or non-innovative, and how centralised or distributed we see society becoming.
Questions about longevity remain unanswered for many defined benefit pensions schemes. At PwC, we have the research, analytics and models to quantify what it will mean for your scheme, taking in your specific situation. Our approach to longevity assessment allows clients to measure the risk present in their scheme and evaluate the options available to reduce this. We have tools to model how possible future developments in medicine, healthcare, technology and lifestyle may impact on mortality improvements for different socio-economic groups, and derive a range of scenarios specific to the profile of your scheme. Finally we have a range of solutions to help clients address the risks they are facing, such as Skyval Insure to source the most competitive insurance pricing required to hedge against life expectancy improvements.
Over the past few decades, predicting life expectancy has been difficult, but the drivers responsible for improving life expectancy were relatively well-understood. It is important to look beyond these past and present trends and consider what more disruptive changes in medicine, healthcare and lifestyle might do to longevity. Life expectancy in the future will be dramatically impacted by innovations in technology, such as gene-editing and nano-technology, but it is not yet clear which technologies will reach viability, exactly how big the impact will be or when it will be felt.