'Life Trust plans to cash in on increasing longevity'

Financial Times, 10th January 2008, by Jane Croft and Andrea Felsted.

'A new company chaired by former Barclays executive Roger Davis has been launched to offer products designed to provide income for people living into their 80s and 90s.

Life Trust aims to offer financial products that it said could help retired people supplement their pensions at a time when longevity is rising.

JPMorgan, the US investment bank, and Royal Bank of Scotland along with hedge fund D. E. Shaw have provided the financing for Life Trust.

The chief executive and founder of Life Trust is Andy Briscoe, a former managing director of Goldfish, the credit card business when it was founded by Centrica.

He is also a former managing director of AA Insurance Services.

The team also includes Mike Tyler, a former chief operating officer of Mercer, as head of strategy.

Mr Briscoe said yesterday that a person aged 35 today has a 50 per cent chance of reaching the age of 90 and a 14 per cent chance of reaching the age of 100.

By 2031, it is estimated that there will be 40,000 people aged 100 or older in the UK compared with just 300 people in 1951.

He said: "This company focuses on the issues arising from longevity. It is a huge opportunity for society and a huge challenge... people may think they will live until they are 80 but actually with improved diet and medical science, people may end up living longer than they think."

Life Trust's first product is a longevity income plan that will supplement a traditional pension.

Investors must pay into the plan for at least 10 years and can invest between £5,000 and £1m.

The plan starts to pay out annually when the investor is aged 75 or 80.

It gives a guaranteed reurn of investment upon death of a planholder but any excess amount is ploughed back into the overall investment fund and bolsters the amount paid out to other investors in the plan.

Increasing life expectancy is a significant issue for both individuals, who fear outliving their savings, and life assurers, which provide the annuity contracts.

These are policies that promise to pay the owner an income until they die.

Aviva, the UK's biggest insurer, has already put aside more money for holders of annuity contracts living longer and other insurers are expected to follow.

Tom McPhail, head of pensions research at adviser Hargreaves Lansdown, said he expected to see more longevity products.'