The new graduated tables of self-administered pension schemes' mortality are now out for consultation.

Members of the Continuous Mortality Investigation (CMI) Self-Administered Pension Schemes (SAPS) Committee will present the graduated tables consultation document — Working Paper 32 (WP32) — at these Sessional Meetings, and will lead the discussions on the production and the use of these mortality tables. The discussions will concentrate on: how the tables will be used; which ones to use, and how to scale them for particular schemes; the different categories of pensioners for whom the tables have been produced; the treatment of younger and older ages; and the table names to be used.

It is stressed that the mortality tables contained in WP32 are issued as part of a consultation process, and that they might be changed before final publication.

This Sessional Meeting takes the form of a panel discussion, asking the question: “Managing defined benefit risk management: is buy-out the future?”

The following are subjects for discussion:

— What is driving the increased interest in buy-out and other risk transfer solutions?

— Will it last?

— Who are the players in this market? Is there room for everyone? Is there enough capital?

— What impact will current economic conditions have on decisions which trustees make?

— What is the role of the Regulator, and how is regulation evolving?

— Are products evolving to meet market needs?

— What are the implications for actuarial pension consultants of the growing buy-out market?

Data from insurance portfolios and pension schemes lend themselves particularly well to the application of survival models. In addition to the traditional actuarial risk-rating factors of age, gender and policy size, we find that using geodemographic models based on postcode provides a major boost in explaining risk variation. Geodemographic models can be better than models based on pension size in explaining socio-economic variation, but a model using both is usually better still. Models acknowledging heterogeneity tend to fit better than models which do not. Finally, bootstrapping techniques can be used to test the financial applicability of a model, while weighting the model fit can be used to address concentration risk.

This paper provides a detailed overview of variable annuities. Consideration is given first to the definition of the term variable annuity. Common terminology used in the variable annuity market is introduced. The current state of the United Kingdom and other international markets is described. Then, by reference to a simplified product, an analysis of customer outcomes, pricing, reserving, risk management and hedging is carried out. The paper ends with a description of current U.K. pensions legislation and how it potentially constrains product development.