The longevity revolution could bankrupt European countries such as France, Germany, Spain and Italy to the tune of 200% of annual GDP by 2050, according to Peter Jeffreys, managing director of Standard & Poor's index services for Europe.
Jeffreys said that people were tending to live longer, resulting in more years between death and the general retirement age of 65. He explained that the axis representing the number of people retiring at 65 and the axis representing a greater life expectancy for Europeans would eventually meet in 2050, resulting in countries finding it difficult to fund pension schemes.
Chairman of the National Association of Pension Funds (NAPF) Peter Thompson recently said that UK companies were at risk of being unable to deliver on increasingly unaffordable pension schemes. He explained that a greater life expectancy, the reduction of long term interest rates, and equity performance over the last 25 years have had a detrimental effect on the affordability of pension schemes.
He told IPN that the NAPF should create a greater awareness on life expectancy issues amongst bodies such as the UK government, the Association of British Insurers (ABI), the Association of Consulting Actuaries (ACA), and other employer-forums.
By Janet Du Chenne
This week's edition of Professional Pensions is out now.
The government is in talks with the UK and Irish pensions regulators over how to protect members of cross-border schemes in the event of a no-deal Brexit.
The equalisation of guaranteed minimum pensions (GMPs) is at least two years away from being completed, and could take longer than four years for some schemes, a poll has found.
The Pensions Regulator will consider if schemes should be required to have professional trustees and assess the case for greater regulation of administrators and system providers, PP can reveal.