Longevity v interest rates – which poses the biggest risk for schemes?
Rising life expectancy poses a greater risk to UK corporate pension schemes than low interest rates, a report this week has suggested, but some industry experts have challenged the finding. Low interest rates have wreaked havoc on many schemes’ funding levels as liability calculations are revised up. Earlier this month the aggregate deficit of the Pension Protection Fund’s 7800 Index reached £254.2bn, up from £93.2bn a year ago. The cost of not hedging longevity in a low interest rate environment is proportionately greater...
