Pension schemes are in trouble. Against a backdrop of dwindling returns, the only thing that appears to be going up is how long scheme members are likely to live and, therefore, require a pension. Regulators in some parts of the world are helping out scheme sponsors by relaxing rules on pension funding so employers are not under such pressure to make the additional contributions needed to close deficits.

But necessity, as they say, is the mother of invention and this could explain why the last few years have seen increasing ingenuity in the industry regarding longevity risk. “I would say that particularly over the last three or four years most schemes have improved the way in which they are looking at longevity risk,” says Andrew Gaches, longevity consultant with Club Vita, the longevity consultancy arm of Hymans Robertson. “This is in part due to lower discount rates, meaning longevity now has a larger financial impact,” Mr Gaches says.