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New life expectancy report service targets DB pension transfers recommendations 

1 July 2018

MorganAsh has launched a new life expectancy report to help financial advisers when making recommendations on defined benefit (DB) pension transfers.

It follows the FCA’s recent requirement that advisers recommending on DB transfers plan for a client to live a “reasonable” period beyond average life expectancy.

According to the health and underwriting services firm, many advisers continue to use a flawed approach when it comes to life expectancy, such as relying on statistical average figures that fail to take into account the individual’s health or lifestyle.

It’s new Life Planning Report aims to offers a personalised best estimate for the life expectancy of a client taking into consideration all of the individual’s circumstances, the firm said.

The report uses Office for National Statistics data to model the ‘normal’ life expectancy for the client and this is modified with the individual’s health information to produce a personalised life expectancy estimate.

A nurse carries out a phone interview with the client to discuss their health, lifestyle, occupation and family history. The information will then be reviewed by an underwriter, who will assess the implications for longevity.

MorganAsh said the service will provide adviser firms with an “objective basis” to discuss longevity with their clients, while also helping firms to meet compliance requirements and maintain public indemnity insurance cover for DB transfers.

Andrew Gething, managing director, MorganAsh, said: “Given the sensitivities around DB transfers, advisers will want to make sure their decisions are based on the very best possible information, which is what our Life Planning Report provides.

“Simply using average life expectancy as the measure of how long someone is likely to live and need to draw a pension income is clearly flawed, because it will underestimate longevity in 50% of cases.

“We believe a much better approach is to provide a specific best estimate of life expectancy for an individual based on a professional assessment of their health and lifestyle.”

Professional Paraplanner