UK - Pensions professionals are still underestimating the effect of increased longevity on their schemes, an exclusive Hewitt poll revealed.
More than 300 delegates at the Pensions Show and the National Association of Pension Funds annual conference took part in a Hewitt game to estimate the life expectancy of various groups of people with different socioeconomic characteristics.
Results showed participants undershot the current projected best estimates of life expectancy by about five years - equating to £150bn of liabilities for UK pensions.
Conference delegates were given information on some of the key factors that affect life expectancy such as individual health, wealth and lifestyle factors, together with information about pension size, address and employment profile.
Hewitt head of longevity and risk transfer solutions Martin Bird said it was "surprising" people familiar with the problem still underestimated longevity.
He said: "Although pension scheme longevity assumptions have increased significantly over recent years to reflect continued improvements in life expectancy, there still appears to be a significant knowledge gap when it comes to understanding just how long people are expected to live.
"The financial implications - potentially £150bn across the UK's pension schemes - speak for themselves."
Solutions, such as longevity swaps, are continuing to gain interest in the UK market. Last year saw the first of these deals and Hewitt predicts 2010 will bring more.
Bird also said he expected to see a boom in longevity swap transactions in the next 12 months. He also predicted a resurgence in the buy-in market.
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