Class, marriage to determine risk
UK - Pension funds in the UK will be better be able to calculate longevity risk using data that takes into account factors including social class and marital status, according to information firm Experian.
Several unnamed "large corporate pension funds" are currently piloting a risk assessment tool developed by the firm based on data segmented into seven mortality groups. To date, similar tools have largely used generic census-type data to calculate liabilities.
According to the data underpinning the tool, social class can alter average life expectancy by up to five years. Currently, the most affluent men live an average of 20 years after retirement at 65, with women in the same group living 23 years. The figure is increasing by two years per decade.
Marriage, which is covered by rules of disclosure, will also be factored in because spouse benefits add up to 12% to the total cost of pension provision.
"We work closely with pension funds, and they have identified a need for a proper valuation of liabilities," said Experian spokesman Bruno Rost. "There has been no detail like it before - certainly not at that level - but accurate assessment will allow them both to adhere to government regulations and to free up capital."