JT Dove reduces pension deficit by 11% via medical underwriting study

Written by Talya Misiri

JT Dove has reduced its pension deficit by 11 per cent following a medical underwriting study to re-examine mortality calculations.

As a result of the study, the builders merchant’s pension deficit of £6.2m, based on actuarial calculations, decreased by £700,000 to £5.5m following a medically underwritten mortality study, which directly obtained information from scheme members.

The £26m defined benefit scheme’s trustees expressed concerns that actuarial assumptions used in previous mortality calculations could lead to the scheme being overfunded or underfunded. In order to tackle this, JT Dove commissioned MorganAsh to carry out the study.

The medical underwriting firm wrote to all scheme members (around 400 individuals) and asked them to complete a medical questionnaire. For further information, some members also partook in phone interviews with nurses. It was noted that around 66 per cent of scheme members co-operated with the study.

JT Dove was advised by Punter Southall to obtain information from its staff.

JT Dove Pension Scheme Trustees chair Ashley Wilton said: "In the past we’d found it difficult to reconcile some of the mortality assumptions used in the calculation of our liabilities with the actual experience in our pensioner population.

"We felt a medically underwritten approach, in which scheme members were actually asked for the facts about their health, would help us better determine our pensioner liabilities and, all-importantly, the funding needs of the scheme."

MorganAsh managing director Andrew Gething added: “By using an evidence-based approach, focused on real data, trustees and company managements are provided with what we believe to be a significantly more accurate forecast.This can affect company valuations and also funding and investment strategies for pension funds.”

Punter Southall principal Gerry Devenney commented: “Analysing data about the actual physical health and lifestyle of pension scheme members removed the need for unnecessary margins of prudence and allowed the trustees and sponsors to arrive at a more realistic estimate of their liabilities.”

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