How Covid-19 could affect your DB endgame journey

Our second report on the FTSE350 defined benefit (DB) market analyses the potential impact of Covid-19 on life expectancy — and how this may influence DB schemes’ journey to their endgame.

FTSE350 companies are increasingly transferring the risks of running and maintaining DB pension schemes to the insurance market, through buy-ins, buyouts and longevity swaps. 

However, there is uncertainty concerning the impact of Covid-19 on life expectancy – and the resulting impact on valuing pension scheme liabilities.

"The outlook for future longevity remains difficult to predict. This is due to uncertainty around how a number of key factors influenced by the pandemic are likely to play out over the next five to ten years."

So, for companies considering the potential cost and timing of approaching the insurance market, this has created additional complexity.


Key findings 

Assets put aside to meet future promised pension payments

UK DB pension scheme liabilities transferred to insurers during 2019 and 2020

Average time to buyout, based on a positive life expectancy impact scenario.

Average time to buyout, based on a negative life expectancy impact scenario.

Journey to the endgame

The pandemic has highlighted the need for diligent risk management. And with the Pensions Regulator (TPR) requiring schemes to think about their long-term strategies, now might be an ideal time to consider management of longevity risk over the long-term. 

A good journey plan, reviewed regularly, should give a clear picture of where the scheme is on its path. It should also dovetail with the funding, investment and administration activity (e.g. getting the data ready for buyout) associated with risk-reduction exercises.

Our DB Navigator framework can help companies and trustees chart the DB endgame journey and agree a plan that caters for the needs of trustees, sponsors and shareholders. 

Please contact Simon Taylor or Simon Bramwell if you would like to discuss any of the topics in more detail.

Download the full insights report.

More on the DB pensions endgame journey

FTSE350 pensions – DB endgame back on course

Missed part one of this series of new research and analysis? Catch up on our overview of how schemes have navigated back on course after a dramatic year — and what this means for the future.

Read the report

DB Navigator interactive framework

Our holistic actuarial, investment and pension administration approach gives you the knowledge, structure and tools to optimise your strategy for tackling the journey towards your DB endgame.

Explore DB Navigator