Schemes have increased life expectancy assumptions used for funding valuations by 11 months in reaction to regulatory pressure, Mercer says.
The consultant's valuations survey found the median life span assumed for active and deferred members is expected to be 89 years and one month. Valuations a year ago used 88 years and two months.
The survey of 196 schemes was carried out on schemes with valuation dates effective around December 2007 and March/ April 2008.
However, Mercer says many of these valuations had not been completed and in these cases the survey was based on the scheme actuary's expectation of the final outcome.
"Trustees continue to fund their plans assuming greater life expectancy for their members," Mercer valuation and funding group leader and principal Harry Sime says.
"The Pensions Regulator's proposals on the use of an additional mortality trigger have had an impact as has the influence of analysis based on membership data."
He adds the longer assumed life expectancy for active and deferred members was due to the greater use of the long cohort projection - 27% expect to use it this time compared to 3% a year ago - and the introduction of underpins to the rates of improvement, up 40% to 48%.
The effect of moving from the medium cohort projection to the long cohort projection is to increase assumed life expectancy by around 21 months. Mercer says underpins tend to have even larger effects, sometimes as much as 3 years.
Sime adds: "The trend towards higher life expectancy assumptions is expected to continue with this being achieved by greater use of underpins and more adoption of the long cohort projection basis.
"A key objective for trustees is to be able to justify the assumptions they have used, noting that their approach should be both evidence-based and prudent".IFAonline
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