Longer life 'risk' for pensions by Finance News Bulletin

Published: 16/02/07

retirement fund funds are underestimating how long their members are likely to live, the Pensions Regulator has warnedDavid Norgrove said the present situation could leave some pension schemes with tens of millions of pounds of additional liabilitiesHe said schemes and their advisers should re-examine the assumptions they use to approximation how extended their members are likely to liveSpeaking in Brighton he supposed: "The indications are that some schemes are probably underestimating life expectancy

"Each day of extra life adds about 3% to 4% to retirement fund scheme liabilities so, with £800bn of liabilities across all UK pension schemes, receiving it wrong could mean some nasty surprises in the prospect"In August, the actuarial firm Lane Clark & Peacock collected together the life expectation assumptions of 37 companies in the FTSE 100 share directory, as disclosed in their yearly reportsThis showed that company longevity assumptions (for a gentleman retiring at 60) varied from 82 to 87, with the average at 85Mr Norgrove sharp out that this was the central projection of the actuarial line of work, based on existence insurance data drawn up between 1991 and 1994

Tim Keogh, a partner at the actuarial solid Mercer, said a important minority of companies tend to take a less conservative sight of life expectancy than the actuaries advising their own pension schemesAs a result some of the schemes might well be predicting a higher height of future longevity than their employers"This discuss is all about how much life expectancy will increase in the prospect," said Mr KeoghWith scheme actuaries now starting to use efficient mortality tables, which had confirmed the projected improvements made in the early 1990s, Mr Keogh supposed that more schemes would now be increasing their life expectation projections

The well established tendency to increased life expectancy has been at the heart of the administration's concerns about the long-term viability of the UK's retirement fund fundsIt was a key fact identified by Lord Turner's Pensions Commission when it optional that the state retirement era be raised in steras to 68The Pensions Regulator was set up in April 2005 to defend and make stronger the system of occupational pension schemes in the UKEarlier this year, the regulator intended that UK occupational pension schemes had a collective shortfall of between £300bn and £400bn

He also warned that between 150 and 300 large work-related pension schemes were at danger and being actively investigatedAnnuity reform Women 1 Women 2 Pension rights separation Work pensions Lump sums retirement fund Credit Frozen pensions Shortfalls Overseas pension Small pensions Tax and pensions retirement fund repair Made simpleState pension With-profits Final salary

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