Nearly nine in 10 (88 per cent) defined benefit (DB) pension trustees are yet to assess the potential impact of breakthrough health treatments on future scheme liabilities, research from Standard Life has found.

The provider said that innovative GLP-1 and metabolic health treatments had the potential to reshape future mortality trends.

It noted that, with 75 per cent of DB schemes in surplus on a low-dependency basis, these positions could come under pressure if mortality improves faster than expected, especially as preventable mortality may not yet be fully reflected in long-term assumptions.

Standard Life pointed to modelling that suggested GLP-1 treatments could, under different scenarios, lead to reductions in mortality of around 1.8 per cent to 5.1 per cent over the longer term, although outcomes vary widely depending on uptake, access, and long-term effectiveness.

The research also showed that 69 per cent of DB scheme trustees were yet to have the opportunity to consider the impact of these weight-loss drugs on life expectancy and benefit payout.

“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,” commented Standard Life managing director – pensions risk transfer & individual retirement, Claire Altman.

“While headline mortality rates are beginning to normalise, there is now greater uncertainty around future improvements, with healthy life expectancy at its lowest level since records began in 2011, at around 60 years old for men and women.”

Altman added that while health innovations could still support longevity gains, the outcomes were far less predictable than historic models suggested.

“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,” she continued.

"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 de-risking decisions, while increasing the complexity of modelling future outcomes, particularly for schemes with geographically diverse memberships.

“For schemes that are transaction ready, buy in will remain the most effective way to secure long term certainty for members, trustees and sponsors.”

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