EUROPE - Professors from Cass Business School and Kingston University have called on actuaries to take a more consistent approach across countries when calculating mortality assumptions used in company pension schemes.
In a recent paper called 'Second International Comparative Study of Mortality Tables for Pension Fund Retirees', professors Steve Haberman and Richard Verrall from Cass and Terry Sithole from Kingston University found that great variations exist between European countries in terms of life expectancy.
The biggest difference was spotted between France, where actuaries estimate that a 65-year-old man can expect to live for 27.5 years, and Denmark, where actuaries believe the same man could expect to live for 15.1 years.
Verrall said: "It is not surprising the mortality assumptions used in company pension schemes should vary from country to country due to variations in underlying population mortality, as well as variations of the profile of typical membership of a company pension scheme.
"However, it appears variations in mortality assumptions are much greater than would be justified by these factors alone."
Haberman also justified the importance of the results, saying that mortality assumption data can have an influence on companies' accounting profile.
He said: "Defined benefit pension liabilities can form a significant item on the balance sheet of many companies.
"If, for example, a company is the subject of a merger or acquisition, and the jurisdiction of the regulations governing the pension liability changes, this can have a significant impact on the transaction."
The paper follows a previous report published in 2006, which compared mortality assumptions used in the valuation of defined benefit pension liabilities in several countries around the world.
The new study has been published following the publication of new mortality tables in some countries since 2006.