For capitalism, there is often a silver lining in bad news.
After a century in which the rate of increase in life expectancy had accelerated, the UK average age of death is seemingly now levelling off at 79 for men and 83 for women. Actuaries said recent data suggesting years of austerity had seen those gains in UK life expectancy grind to a halt and it would provide “welcome respite for companies”.
An updated financial assessment to reflect the diminishing life prospects of retired UK employees would cut the aggregate liabilities of FTSE 350 companies by about £10bn.
The combined pension deficit of FTSE 350 companies has risen to £62bn, accounting for 70% of their profits.
Nick Griggs of Barnett Waddingham said the deficit problem could be solved with higher returns and rises in long-term interest rates.
“The deficit is essentially the difference between two much bigger numbers, and a few gentle economic triggers could completely change the picture,” he said. “This is why many companies are not rushing to clear deficits quickly with additional cash contributions.”
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