According to research by KPMG, increasing life expectancy cost the UK an extra £20 billion in pension liabilities in 2005.
Their report showed a big difference in life expectancy assumptions by pension funds in the financial services sector, compared to those in other sectors. Their assumed life expectancy for current and future pensioners is one year higher than companies in other sectors, which is around £5 billion in additional pension liability of £125 billion for all quoted financial services companies in the UK.
Our view
We believe pension fund trustees and actuaries have every right to be more cautious and expect people to live even longer. As medical kwowledge, diet and fitness improves, we will live longer.
It is right to plan for this now and allow for greater pension costs to cover this.