UK defined benefit (DB) pension schemes are likely to see a 2.5% reduction in liabilities as a result  of a revision to the Continuous Mortality Investigation’s (CMI) life expectancy model for 2018, according to consultancies Aon and Willis Towers Watson.

Releasing its latest projections, the CMI said there was a growing consensus in the industry that, although mortality would continue to improve, the rates of mortality improvement over the next decade would be slower than those seen in the first decade of this century.

“When compared with the previous CMI 2017 model, cohort life expectancies at age 65 are around five months lower for both males and females, at 19.8 years and 22.4 years, respectively,” the CMI said.

Changes to the latest mortality projections model from the CMI – which is owned by the UK’s Institute and Faculty of Actuaries – included data from across the UK population up to the end of 2018, putting more weight on the narrower mortality improvements in recent years.

Aon said the changes would decrease projected life expectancies and therefore scheme liabilities.

Matthew Fletcher, senior longevity consultant at Aon, said: “While the pensions industry still expects mortality rates to improve, by increasing the weight placed on recent mortality improvements, the new model reflects the growing evidence that these improvements are likely to be slower in the near term than the historically high rates seen in the years up to 2011.”

Meanwhile, Willis Towers Watson’s retirement business director and longevity specialist Stephen Caine said a six-month reduction in life expectancy at 65 could knock around 2.5% of the liabilities off a typical pension scheme. This translated to roughly £20bn (€23bn) for FTSE 350 scheme sponsors as a whole.

Annual improvements in life expectancy between 2000 and 2011 produced an average increase of around 2%, but mortality improvements have slowed since 2011 to around 0.5% a year, according to Willis Towers Watson.