Pensions - Articles - JLT Index for DB funding shows modest improvement

 As at 30 September 2018, JLT estimates the total DB pension scheme funding position as follows:

 Charles Cowling, Chief Actuary, JLT Employee Benefits, comments: “This has been a quiet month in markets with both the inflation outlook and long-term interest rates drifting slightly upwards. At the same time equity markets have held up well, despite continuing political uncertainty in Europe and the US. All of this means that pension scheme deficit positions are broadly unchanged, showing a modest improvement over the last 12 months.

 “Perhaps the news that will be of most interest to finance directors and shareholders is the recent announcement from the Office of National Statistics that life expectancy in the UK has stopped improving for the first time since their figures began in 1982. Companies are also going to be looking at making changes to their life expectancy assumptions, given that current indications also show that 2018 is going to be another relatively heavy year for mortality.

 “After decades of continuing improvements in life expectancy resulting in ever increasing pension liabilities – this slowdown in longevity improvements has the potential to knock billions off pension liabilities. We estimate that 2018 could see pension liabilities reduce by over £40billion on account of the changing outlook for life expectancy, sending pension schemes soaring into surplus – at least as far as the numbers recorded in company accounts are concerned.”