Pension liabilities - COVID-19

[TUK020]

I wonder if COVID 19 will have a material effect on life expectancy in the UK, and thus the actuarial liabilities of pension funds.
Anyone more numerate than me in a position to comment?

[dealtn]

I wonder if COVID 19 will have a material effect on life expectancy in the UK, and thus the actuarial liabilities of pension funds.
Anyone more numerate than me in a position to comment?

It's too early to say at the moment I would suggest. It's also not just about this wave, but the likelihood both of a return, or the pricing in of future pandemics which would I think I have had a very small probability on pre-Covid19 mortality risk tables.

The bigger move on the liability side of a pension funds balance sheet will likely be from interest, and inflation rates. That is also too early to predict unfortunately. Deflationary forces currently keeping both low, but the inflationary impact of the policy "medicine" might blow both much higher in the forward space.

Companies with historic pension issues are also often those that carry large debt on their balance sheets, and it will be important to know what proportion of that is fixed rate, and how much an inflationary episode might assist in reducing the real burden of that debt, and how much pricing power they have for their own products.

Interesting times indeed.

[supremetwo]

I wonder if COVID 19 will have a material effect on life expectancy in the UK, and thus the actuarial liabilities of pension funds.
Anyone more numerate than me in a position to comment?

Not Corvid as yet, but such as obesity and diabetes are said to have added £1bn from longevity not rising as expected in these 2014 and 2018 articles:-

https://www.nhs.uk/news/obesity/obesity ... of-health/

https://www.theguardian.com/money/2018/ ... cy-pension

In March (2018), the UK’s biggest life insurer Aviva said the changes had allowed it to reduce longevity reserves by £290m, while Standard Life Aberdeen reported a £79m boost in February. As more insurers release reserves, the total gain is likely to far exceed £1bn.