27 April 2007
Analysis by KPMG has revealed that UK private sector companies
have added around £30 billion to the level of pension
liabilities shown in their accounts over just two years due to
increases in life expectancy for their pension scheme members.
FTSE 100 companies have borne the majority of this cost, with an
estimated £25 billion being added to their balance sheets
over 2005 and 2006. KPMG points out that, compared to the aggregate
FTSE100 pension deficit at 31 March 2007 of approximately £25
billion, this effectively means that there would be no FTSE100
pension deficit had life expectancy remained at previously assumed
levels.
Under accounting guidelines, companies are required to make best
estimate assumptions to determine the fair value of their pension
liabilities. These include estimates of financial assumptions, such
as future inflation, and demographic assumptions such as life
expectancy.
