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18 February 2008
Punter Southall comments on Pensions Regulator’s consultation paper on longevity assumptions for pension schemes
Further to the publication of the Pensions Regulator’s consultation on longevity assumptions for pension schemes, Danny Vassiliades, Principal at Punter Southall comments:
Longevity bombshell adds to UK pension woes
FTSE100 companies were today facing up to the possibility of a potential £150bn of pension liabilities to be recognized on their balance sheets.
The Pensions Regulator today published consultation on longevity assumptions for pension
schemes which would increase by about two years the expected life expectancy of pensioners
compared to typical assumptions. If these assumptions were used in accounting disclosures
using the ASB’s proposal for changes to the way liabilities are measured, this could add an
astonishing £150bn to the liabilities on UK balance sheets.
Last month the ASB proposed using gilt yields rather than corporate bond yields for pension
scheme liability calculations, a proposal that would add approximately 30-35% to pension
scheme liabilities if adopted. The Regulator’s consultation on the use of longevity assumptions
with greater allowance for future improvements in life expectancy could add another 8% to
liabilities if adopted. Together, this could radically increase the liabilities recognized on balance
sheets by the UK’s biggest companies.
For more information or to speak to Punter Southall, please contact:
Penrose Financial
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