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19 Feb 2008
Pensions industry consultants are alarmed at proposed new regulatory guidance released yesterday, under which schemes would have to make assumptions about liabilities using mortality data, which reflect a life expectancy of 89 years.
The Pensions Regulator formally announced the proposals, which call for special scrutiny to be applied to schemes that do not assume members will live at least as long as the age in a key actuarial table, known in industry shorthand as PA92 long corhort, according to the Financial Times.
The proposals, combined with new accounting rules, place pressure on companies to substantially increase funding for schemes, according to John Davies, Association of Chartered Certified Accountants head of business law.
Marcus Hurd, a senior Aon consultant, said: ‘If companies were to...adopt the pension regulator’s proposed assumptions, then 99% of companies would need to strengthen their assumption. The effect would be to increase the UK’s reported pension liabilities by at least £75bn ($146bn) immediately.’
Further reading:
BT risks pension deficit to balloon to £4.6bn
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