The majority (57 per cent) of pension professionals do not expect to make any changes to future morality improvement assumptions for pension schemes in light of the Covid-19 pandemic, Society of Pension Professional (SPP) research has revealed.

A survey by the SPP at a recent virtual event revealed that just 5 per cent of attendees expect to make changes to morality improvement assumptions for some pension schemes, and just 1 per cent expect to make changes for all their schemes.

Although almost a third (31 per cent) of respondents stated that they were still unsure of what changes they might make.

Over half (54 per cent) of those surveyed also stated that they expect future mortality improvements to remain “about the same”, despite the impact of the Covid-19 pandemic.

A further 25 per cent of respondents stated that they expected mortality improvements to decline, and 16 per cent thought that it would increase.

Commenting on the findings, SPP president, James Riley, emphasised that attendees had
been “positive about the future impact of the pandemic”, with a limited expectation of significant further Covid-19 related deaths

“That said there is significant uncertainty,” he clarified, “and this is reflected in the number of attendees who answered ‘don’t know’ to a given question. Perhaps surprisingly, attendees seemed most confident in the impact on future improvements, arguably the most uncertain element.”

Considering year-on-year mortality data, a third (37 per cent) of respondents stated that they expected the 2020 mortality rate to be 10 per cent higher compared to 2019.

A quarter expected it to be 25 per cent higher, while almost a fifth (19 per cent) expected it to be more than 20 per cent and a further 19 per cent were unsure.

The SPP emphasised that the responses reflect a “considerable amount of uncertainty”, although the findings are “broadly optimistic”, expecting a limited number of additional deaths over the second half of 2020.

Commenting on SPP’s findings, Aon senior longevity consultant, Matt Fletcher, explained that as there has already been around 60,000 excess deaths in the UK in the first half of 2020, there would need to be no excess deaths in the second half of the year to reach a 10 per cent increase in morality over the year.

He clarified that the data “clearly shows” that the first wave of infections and deaths has passed, emphasising however, that “the key” will be whether or not there is a second wave as lockdown ends.

Fletcher continued: “If we are able to avoid a material second wave of infection, then a 10 per cent increase in mortality over 2020 is possible – if we do experience a large second wave then the figure could be much higher.

“There are clear areas where Covid-19 could have a positive impact and equally clear areas where the impact is likely to be negative – and it is not at all clear at this stage which side of the balance will dominate over the longer term.

“The views set out in the polls reflect this uncertainty, with many thinking improvements are likely to be broadly unchanged, a significant minority on either side of the positive/negative divide, and a lot of ‘don’t know yet’ on the question of setting improvements.

Also commenting on the results, COIOS chief science officer, Dan Ryan, added: “The level of uncertainty about the future, given our still limited knowledge about Covid-19 is very clearly reflected in the answers to the questions.

“Looking further into the future, the question is whether Covid-19 will have a lasting impact on the population, particularly those that survived severe symptoms.

“For those that required hospitalisation, there is evidence of lasting damage with lung fibrosis and impaired kidney function. The NHS is predicting that up to 100,000 of confirmed cases (about a third) could be affected, although this would appear conservative.

“The impact on the wider population is much less certain, and there may be benefits for some because of better hygiene and new positive behaviours that have been cemented over lockdown – but the long-term effects of missed/interrupted treatments are likely dominate and exert a downward force on future mortality improvements.”

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