The FCA introduced a requirement earlier this year that advisers recommending on DB transfers must plan for a client living a “reasonable” period beyond average life expectancy.

This consideration of how long a client might be expected to live and need an income from their pension is an important factor in recommending whether they should remain in a DB pension scheme or transfer out.

However, MorganAsh says many advisers are still using flawed approaches when considering life expectancy, such as relying on statistical average figures that take no account of the individual’s health or lifestyle. The company believes these methods may not satisfy compliance requirements.

Using medical underwriting and actuarial techniques employed by major insurers, MorganAsh has now launched the Life Planning Report to provide a personalised best estimate for the life expectancy of a client, taking into account their individual circumstances. 

A nurse will conduct a phone interview with the client about their health, lifestyle, occupation and family history. This information is evaluated by an underwriter, who will assess the likely implications for longevity.

MorganAsh uses Office for National Statistics data to model the ‘normal’ life expectancy for the client and this is modified with the individual’s health information to produce a personalised life expectancy estimate.

The key benefits of the service are:

  • Independent best estimate of life expectancy provides the adviser with an objective basis to discuss longevity with the client and the implications for DB transfer. 
  • Report demonstrates, for compliance purposes, that a personalised best estimate of life expectancy has been considered.
  • Helps to maintain public indemnity insurance cover when recommending on DB transfers.
  • Independent professional nurses conduct sensitive conversations with clients about health and lifestyles, alleviating this burden for advisers.

Andrew Gething, managing director of MorganAsh, said: “Given the sensitivities around DB transfers, advisers will want to make sure their decisions are based on the very best possible information, which is what our Life Planning Report provides.

“Simply using average life expectancy as the measure of how long someone is likely to live and need to draw a pension income is clearly flawed, because it will underestimate longevity in 50% of cases.

“We believe a much better approach is to provide a specific best estimate of life expectancy for an individual based on a professional assessment of their health and lifestyle.”

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