UK - The head of the Pensions Regulator has warned that underestimating members' life expectancy could mean millions of pounds of extra pension liabilities.
In a speech to the UK Pensions and Investment Summit David Norgrove said scheme trustees and their advisers should 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."
He told delegates" We're all living longer. Studies by the CMIB (the Continuous Mortality Investigation Bureau, which looks at insurance companies' mortality experience) and the Government Actuary's Department (which until recently was responsible for UK population statistics) show that longevity has been improving steadily, and continues to do so.
"However, predicting the future is an uncertain business. Generally, schemes are allowing for improving longevity - but what if improvements are even higher than expected? In the long term, significant improvements in longevity could potentially prove quite a shock for DB scheme sponsors."