Hugh Nolan, Chief Actuary at JLT Employee Benefits, comments:
“The latest actuarial model, released today, predicts that life expectancies have fallen compared to 2014. A male currently age 65 is now predicted to live for 24 years and 5 months on average, 4 months less than the 2014 model predicted.
“This reduces the liabilities of UK private sector pension schemes by some £15bn. While this is only 1% of the total liabilities held, it will reduce the deficit in a scheme that is 90% funded by 10% of that deficit, which can be extremely helpful for individual schemes struggling to reach full funding.
"Similarly public sector pension liabilities (including State pensions) could reduce by around £70bn. This will be a very welcome boost to the Treasury!
“This is a significant blip in life expectancy trends and is unprecedented in recent times. Trustees and employers need to consider the new information carefully and decide whether to adopt the new projections when updating their figures. The latest mortality statistics may just be a random variation or they could indicate a genuine slowing of the rapid improvements we’ve seen recently. We may need to wait for another major change in lifestyles or significant medical advances before longevity accelerates back to the same level as over the last few years.”
Francis Fernandes, Actuary &Senior Adviser at Lincoln Pensions, comments:
"The new tables serve as a timely reminder to trustees and employers of DB pension schemes that any mortality tables are simply a guide to the future. It's probably better to be pragmatic and reflect any step changes in the tables - good or bad depending on one's perspective - over a period of years. This will give sufficient time to see if the revised tables are borne out in practice, noting the sponsor covenant will be there to support the impact of adverse experience."
|
