UK Money News
14th May 2008
Pension providers increase life expectancy assumptions
An increase in life expectancy has prompted a number of the UK's leading companies to increase their liabilities.
Research conducted by Mercer showed that FTSE 350 firms raised their liabilities by two per cent last year, adding a further £8 billion to their provisions.
The move was made following a 0.5 per cent average increase in life expectancy, as calculated by actuaries.
Also detected by Mercer was a turnaround in the funding levels among providers of retirement schemes from a deficit of £14 million at the end of last year to a surplus of the same amount by the end of March.
John Hawkins at Mercer commented: "Further improvements in life expectancies are still anticipated, although increases in liabilities are not likely to be restricted to this factor alone.
"Deficits on the actuarial bases typically used by trustees to set contributions are still increasing, despite falling accounting deficits, so there is potential for additional cash flow strains for companies even if their disclosed accounting position appears to have improved."
The increases come amid mounting pressure from the pensions regulator for firms to employ more accurate assumptions.
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