£10bn added to pensions bill as the old get older
Previous Article Next Article Continued improvements in life expectancy may have added as much as £10bn tothe pension fund liabilities of FTSE100 companies over the past three years. Pensions advisers Aon Consulting, using the Government’s latest lifeexpectancy figures and the FRS17 accounting rules, predicts that for every yearof increased life expectancy, pension costs will rise by approximately 3.5 percent. Paul McGlone, principal at Aon Consulting, said as life expectancy increases,companies must ensure they factor this into their company pension provisions. He said that failing to take into account just one extra year of lifeexpectancy when calculating pensions could cost companies millions if notbillions. “Our advice to companies is to check, on an ongoing basis, that theassumptions on which they base their pension provision are in line with thelatest life expectation figures as, as well as the experience of theirscheme.” McGlone said that new anti-age discrimination legislation – meaning thatcompanies will no longer be able to enforce a mandatory retirement age belowage 70 – will also impact on pensions. He said that as people come to realise that their company and state pensionswill not provide for an adequate retirement, their natural reaction might be towork longer. The latest government figures show that there has been a 10 per centincrease in the life expectancy of men over 65 since 2001. And male lifeexpectancy is expected to rise by an average of two years up to 2050. Current life expectancy for men is just under 76, while women live to atleast 80. The Department for Work and Pensions has launched a website providing adviceon changes to pensions. By Quentin Readewww.thepensionservice.gov.uk Related posts:No related photos. £10bn added to pensions bill as the old get olderOn 10 Feb 2004 in Personnel Today Comments are closed.