PENSIONS BLACK HOLE COULD BE EVEN BIGGER
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| Article date: 13/10/2005 : 16:30:23 |
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The company pensions shortfall could be larger than forecast because increased longevity has not been accounted for.
The claim, made by investment bank UBS, is that some companies regularly ignore ever increasing life expectancies when they calculate their pension fund liabilities.
UBS believes the total pension deficiency in the FTSE 100 alone is £53.7 billion and it says almost £17 billion of this is down to companies overlooking longer life expectancies.
The latest statistics from the insurance industry shows that, on average in the UK, women in their mid-60s will live to 89 and men in their mid-60s will are expected to live to 86.
Analyst Steve Cooper told the Daily Mail that the current situation, where companies rarely disclose their assumptions about life expectancy in their accounts making it impossible to tell how accurate they are, should be changed.
He said: "I don't understand why auditors don't force the disclosure of longevity assumptions. It is a material point."
If this was to happen, many companies could well see their share price fall.
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