In 2006, listed companies increased the allowance they make for the life expectancy of their pension scheme members by a whole year, according to a survey issued by Mercer Human Resource Consulting.
The FTSE 350 survey also showed that these revised longevity assumptions have increased the value placed on pension scheme liabilities by 3 percent — equivalent to 13 billion.
By contrast, although deficit correction contributions reached a new record of 6 billion in 2006 (up 8 percent), those contributions were less than half the value of the liability increase.
“Most companies are now disclosing their longevity assumptions,” says Tim Keogh, worldwide partner at Mercer. “Our analysis shows that many have revisited these since last year, when the introduction of international accounting standards first put this data in the public domain. Differentiation by workforce type is increasingly evident, with financial and services sector workers typically assumed to live 1.5 years longer than those in manufacturing and industrial sectors.”