New technology to help pension schemes assess longevity risk is now being used by its first schemes.

ICI pension fund and Invensys pension scheme have both used LCP LifeAnalytics, the latest technology from LCP, to understand the longevity risk they are running.

LCP developed the technology in response to the fact it found that most pension schemes do not quantify their longevity risk in the same sophisticated way they do with their investment risks.

It says more schemes are now de-risking their investment strategies and longevity risk is increasingly dominating for those schemes.

LifeAnalytics helps to fill this gap in pension schemes' risk monitoring frameworks by allowing schemes to quantify the types of longevity risk they face and be confident they are making good risk reduction decisions across all the risks they are running.

Andy Smith, CEO of the £5bn Invensys pension scheme, said: "LCP LifeAnalytics provided us with a way of measuring longevity risk that for the first time allowed us to analyse all our risks together."

The ICI Pension Fund uses the longevity risk output from LCP LifeAnalytics alongside LCP's real-time funding and investment tool, LCP Visualise, as part of its risk management platform.

Heath Mottram, CEO of the ICI pension fund, said: "LCP's technology platform enables us to identify which de-risking actions offer the best value-for-money, including our recent buy-ins with Scottish Widows and Legal & General."

Michelle Wright, led the development of LCP LifeAnalytics for LCPs: "Considering longevity and investment risks in a consistent framework allows pension scheme trustees and sponsors to see more easily which de-risking actions offer them the best 'bang for their buck'."

LCP has this week also launched a new interactive site which offers the opportunity for pension schemes to get a feel for what longevity risk might look like in their scheme by answering three simple questions.

First published 04.08.2016

Lindsay.sharman@wilmingtonplc.com