26 September 2006
Underestimating life expectancy among their members could leave
pension schemes with tens of millions of pounds of unforeseen
liabilities, according to the Pensions Regulator.
In a speech to the UK Pensions and Investment Summit in
Brighton, David Norgrove, chairman of the Pensions Regulator, said
that scheme trustees and their advisers should take another look at
the assumptions they have made about life expectancy to ensure that
they remain suitable.
He said: "While individual schemes may have made different
assumptions which may be appropriate and prudent, the indications
are that some schemes are probably underestimating life
expectancy.
"The effects of changing life expectancy are so substantial that
they are worth revisiting. Each year of extra life adds about three
to four per cent to pension scheme liabilities so, with 800 billion
of liabilities across all UK pension schemes, getting it wrong
could mean some nasty surprises in the future.
"That is why it is essential that trustees and advisers address
this increasingly important issue sooner rather than later."
