Life expectancy assumptions have fallen for the fourth year running, reflecting a decrease in the expected rates of future improvements in mortality.
KPMG’s Pensions Accounting Survey, which looked at trends in best-estimate assumptions based on 212 clients with UK defined benefit (DB) pension schemes, found median assumed life expectancies for current pensioners have reduced by 0.2 years to 86.9 (measured from age 65).
Life expectancies for future pensioners have reduced by 0.1 years to 88.4 (measured from age 45) compared to last year’s survey.
Naz Peralta, pensions director at KPMG, said by the end of 2019 assumed life expectancies will be back to levels last seen in 2009.
“This ‘lost decade of life expectancy’ is largely due to the slowing rate of future mortality improvements as projected by the Continuous Mortality Investigation Bureau (CMIB) over the past four years,” Peralta added.