Weight loss health treatments have the potential to reshape mortality trends, but almost nine in 10 (88%) defined benefit pension trustees have not yet assessed the impact of this uncertainty on scheme liabilities, according to Standard Life.
The retirement specialist warned that with three quarters (75%) of DB schemes in surplus on a low-dependence basis, these positions may come under pressure if mortality improves faster than expected, particularly given preventable mortality may not yet be fully reflected in long-term assumptions.
Obesity is currently one of the UK’s leading risk factors for premature mortality, driving deaths through related long-term conditions.
While outcomes of GLP-1 treatments vary greatly depending on uptake, access and long-term effectiveness, recent modelling suggests such treatments could lead to reductions in mortality of around 1.8% to 5.1% over the longer term.
Standard Life said its research also showed that 69% of DB trustees have not yet had the opportunity to consider the impact of weight loss drugs on life expectancy and benefit payment.
The firm said improved health outcomes could extend how long pensions are paid, creating new considerations for schemes approaching buy-in or buyout. Longer lifespans may also influence pricing, investment horizons and the long-term affordability of benefits, making it essential for trustees to understand the impact on future cashflows.
Claire Altman, managing director, pensions risk transfer and individual retirement at Standard Life, said: “For many years, life expectancy assumptions were built around a relatively steady pattern of improvement, but that narrative has been challenged in recent years by the pandemic.
“There is now greater uncertainty around future improvements, with healthy life expectancy at its lowest level since records began in 2011. While health innovations could still support longevity gains, the outcomes are far less predictable than historic models suggest. Uncertainty itself is becoming a key risk factor, as trustees navigate a more complex and less predictable environment, particularly when thinking about long-term liabilities.
“While strong funding positions offer schemes some breathing room, they can change quickly if members live longer than expected. These dynamics can affect benefit duration, liability assumptions and the timing of derisking decisions, while increasing the complexity of modelling future outcomes, particularly for schemes with geographically diverse memberships.”
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