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Advisers underestimate life expectancy at their peril, warns Pensions Regulator

Underestimating life expectancy among their members could leave pension schemes with tens of millions of pounds of unforeseen liabilities, the Pensions Regulator has warned.

In a speech to the UK Pensions and Investment Summit in Brighton, the regulator’s chairman David Norgrove urged scheme trustees and their advisers to take another look at the assumptions they have made about life expectancy to ensure that they remain suitable.

He said: “While individual schemes may have made different assumptions which may be appropriate and prudent, the indications are that some schemes are probably underestimating life expectancy.

“The effects of changing life expectancy are so substantial that they are worth revisiting. Each year of extra life adds about three to four per cent to pension scheme liabilities so, with £800 billion of liabilities across all UK pension schemes, getting it wrong could mean some nasty surprises in the future.

“That is why it is essential that trustees and advisers address this increasingly important issue sooner rather than later.”


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