What is an underpin?
Under all three cohort projections, the long-term rate of improvement is assumed to tend to zero (i.e. there is assumed to be a limit to the continued improvement in life expectancy). However, with life expectancies increasing through much of the last century and little evidence to suggest that this trend is likely to reverse any time soon, trustees are increasingly adjusting the standard cohort projections so that the assumed annual rate of improvement does not fall below a minimum level (or ‘underpin’) – typically of the order of 1-2% per annum. What is the Regulator planning? In a consultation ending in mid-May, the regulator proposed setting a mortality trigger, whereby pension schemes are highlighted as ‘at risk’ if they do not use the most extreme of the three mortality models commonly in use – the long cohort – regardless of the individual circumstances of the scheme. The regulator agrees that less than 1% of schemes who submitted recovery plans for valuations, with effective da
