New weight-loss drugs could change current mortality trends, yet the majority of pension trustees have not yet considered how their scheme’s liabilities will be impacted, a recent survey suggests. 

Obesity is one of the UK’s top risk factors for premature deaths, but this statistic could be upended by GLP-1 and metabolic drugs in the way smoking bans in public places and health campaigns have reduced lung cancer. 

Falls in UK mortality could range from 1.8% to as much as 5.1% by 2045, Swiss Re said last year, thanks to a reduction in cardiovascular disease and other conditions, although it noted that the drugs lead to loss of muscle mass and that weight regain is common when the drugs are discontinued. 

Despite these drugs’ potential to extend lives, more than two-thirds of trustees (69%) have not yet thought about the effect on longevity and benefit payments, a survey by provider Standard Life has found. Nine in 10 (88%) have not yet had the “opportunity” to conclude what these lifestyle treatments mean for their liabilities, creating uncertainty about future trends, it added. 

“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,” said Claire Altman, managing director pensions risk transfer and individual retirement at Standard Life. 

It is uncertain what long-term effects health innovations like skinny jabs will have. They could increase longevity, but Altman said the outcomes are far less predictable than historic models suggest, with uncertainty itself becoming a risk factor.

UK defined benefit schemes are currently well funded – three-quarters are in surplus on a low dependency ratio – but this could change if current assumptions about longevity turn out to be overly pessimistic, potentially leaving DB schemes vulnerable to deficits.  

LCP’s head of longevity and demographic insights, Stuart McDonald, co-authored the Institute and Faculty of Actuaries’ recent paper about weight-loss drugs. He agreed that anti-obesity medicines are potentially a significant development for pension schemes but warned pension scheme trustees against jumping “from clinical promise to actuarial projection”. 

“At present, much of the demand appears to be through private prescribing and concentrated in working-age groups, particularly women, where many DB schemes have only limited direct exposure,” he pointed out. “So this is not a case for dramatic one-off changes to mortality assumptions.”  

However, schemes running on and retaining longevity risk will want to monitor emerging evidence and signs of broader uptake among their relevant groups, he added. For those that are considering surplus release, McDonald recommended scenario analysis to give trustees confidence that surplus will not be eroded by future health boosts.  

The Association of Consulting Actuaries said the impact of weight-loss drugs on life expectancy is still being considered. ACA chair Chintan Gandhi expects to see improvements but cautioned that the effect on population level mortality remains uncertain and long-term side effects are still unknown.

 

“Industry reports suggest widespread use of these drugs could potentially lead to 2-3% reduction in UK population mortality in the next 20 years,” he said. 

 

He agreed that any potential improvement in life expectancy is likely to benefit those who have not yet retired, “so any liability impact will depend on the age profile of a DB and [collective defined contribution] scheme”. 

 

Gandhi highlighted that health improvements could also have implications for DC scheme members, who have to make their DC pots stretch across their retirement.

Weight-loss drugs are not the only recent health innovation that could extend lives. Half of UK cancer patients now live for at least another 10 years – about double the rate of 1971 – thanks to earlier detection, more targeted treatments, vaccines and public education. Meanwhile, artificial intelligence has the potential to turbocharge vaccine development, with some research teams at UK universities already trialling AI-discovered vaccines, including against flu and coronaviruses, which can be deadly for older people.