Regulatory changes alarm pension industry

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.

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

New rules to shake up accounting for pensions

the story in the Financial Times

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