Shorter life expectancy gives UK pensions an unexpected windfall
This is the headline of the FT’s pension piece this morning, penned by Jo Cumbo.
It is no doubt a good news story for FT readers who do not have rights to a state pension an occupational pension or haven’t purchased an annuity. But I doubt it will be regarded as a “windfall” by those who do – unless the primary consideration is the financial health of the companies that support defined benefit pensions or the share-price of your favored annuity provider.
Celebrating shorter than expected life expectancy is not a good look to the general public so pack up the party gear, if you’re planning a pension party.
Stuart Macdonald and the Covid 19 Actuarial Response Group have been developing this story week-by-week over the past three years. Here is the latest in a line of reports fed to us through its website and social media.
ONS deaths data has been released for week ending 17 Mar.
1,074 more deaths were recorded in-week compared to the 5-year average. That’s 10% more which is a bigger excess than recent weeks.
Year-to-date there have been 147,964 deaths recorded, 6% more than the 5-year average. pic.twitter.com/FEoXoH0H0i
— stuart mcdonald (@ActuaryByDay) March 28, 2023
As Stuart has been telling us since the first days of the pandemic, every day lost is a personal sadness and a pool of sorrow to those who love the lost one. We should not allow the idea of de-risking liabilities to obscure that observation.
I can’t be too po-faced with actuarial friends like Mike Harrison about
Every mortality cloud has a pensions industry silver lining.
— Mike Harrison (@HigherEdActuary) April 4, 2023
But it’s worth taking a step back and wondering at how far we’ve come since Thomas Hobbes wrote these words.
If we measure the £30bn windfall with the £550bn we’ve laid out protecting our pension schemes against the phantom risks of inflation and interest rates, we see it’s small solace.
If we measure the £30bn windfall in terms of the weeks and months and years we do not live and do not love those who would have been living, we have no solace.
Windfalls come and windfalls go, but death is always with us, and the further from us we can push it, the better.