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You can find the current article at its original source at https://www.theguardian.com/money/2018/aug/09/billion-pound-bonanza-for-life-insurers-over-slowdown-in-life-expectancy-pension
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| Version 2 | Version 3 |
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| Pension firms profit from slowdown in life expectancy growth | Pension firms profit from slowdown in life expectancy growth |
| (about 2 months later) | |
| Britain’s pension providers are enjoying a £1bn bonanza from the worsening outlook for life expectancy, as they book large profits from people who are dying unexpectedly early. | Britain’s pension providers are enjoying a £1bn bonanza from the worsening outlook for life expectancy, as they book large profits from people who are dying unexpectedly early. |
| Legal & General, which manages pensions for 1.1 million people, said that changes in mortality rates will allow it to release between £300m and £400m during 2018. Chief executive Nigel Wilson said: “People are not living anywhere near as long as anyone thought they would.” | Legal & General, which manages pensions for 1.1 million people, said that changes in mortality rates will allow it to release between £300m and £400m during 2018. Chief executive Nigel Wilson said: “People are not living anywhere near as long as anyone thought they would.” |
| In 2010 we stopped getting any older. The implications are huge | In 2010 we stopped getting any older. The implications are huge |
| Pension companies have sold annuities (a guaranteed income for life) to around 5 million people at retirement on the basis of assumptions about rising longevity. In turn, they hold reserves to cover these guarantees. But as gains in life expectancy have failed to materialise, those reserves are now being returned to shareholders or reinvested. | Pension companies have sold annuities (a guaranteed income for life) to around 5 million people at retirement on the basis of assumptions about rising longevity. In turn, they hold reserves to cover these guarantees. But as gains in life expectancy have failed to materialise, those reserves are now being returned to shareholders or reinvested. |
| In March, 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. | In March, 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. |
| Announcing a 5% increase in operating profit to £909m, L&G said: “We continue to see evidence of higher than expected mortality. In 2017, our mortality analyses resulted in a pre-tax release of £332m of prudence within our reserves. | Announcing a 5% increase in operating profit to £909m, L&G said: “We continue to see evidence of higher than expected mortality. In 2017, our mortality analyses resulted in a pre-tax release of £332m of prudence within our reserves. |
| “At this stage in our review of the 2016 mortality tables, we anticipate a £300m to £400m release to be recognised in our 2018 full year results.” | “At this stage in our review of the 2016 mortality tables, we anticipate a £300m to £400m release to be recognised in our 2018 full year results.” |
| It’s time for Britain’s millionaire pensioners to pay up | Phillip Inman | It’s time for Britain’s millionaire pensioners to pay up | Phillip Inman |
| This week, the Office for National Statistics said the UK has experienced one of the largest slowdowns in life expectancy growth among 20 of the world’s leading economies. It confirmed earlier figures that show that, since 2010, Britons’ life expectancy has stopped increasing, with the change most pronounced in women. | This week, the Office for National Statistics said the UK has experienced one of the largest slowdowns in life expectancy growth among 20 of the world’s leading economies. It confirmed earlier figures that show that, since 2010, Britons’ life expectancy has stopped increasing, with the change most pronounced in women. |
| Announcing a 5% increase in operating profit to £909m, L&G said: “We continue to see evidence of higher than expected mortality. In 2017, our mortality analyses resulted in a pre-tax release of £332m of prudence within our reserves. At this stage in our review of the CMI 2016 mortality tables, we anticipate a £300m to £400m release to be recognised in our 2018 full year results.” | Announcing a 5% increase in operating profit to £909m, L&G said: “We continue to see evidence of higher than expected mortality. In 2017, our mortality analyses resulted in a pre-tax release of £332m of prudence within our reserves. At this stage in our review of the CMI 2016 mortality tables, we anticipate a £300m to £400m release to be recognised in our 2018 full year results.” |
| Pension freedoms introduced by George Osborne in his March 2014 budget freed savers from any compulsion to buy an annuity. Since then, sales of annuities have collapsed to under a quarter of their previous level. | Pension freedoms introduced by George Osborne in his March 2014 budget freed savers from any compulsion to buy an annuity. Since then, sales of annuities have collapsed to under a quarter of their previous level. |
| Annuities were widely criticised for offering very poor rates, partly because of the fall in interest rates after the great financial crash, but also because actuaries assumed that people were going to live much longer. | Annuities were widely criticised for offering very poor rates, partly because of the fall in interest rates after the great financial crash, but also because actuaries assumed that people were going to live much longer. |
| The death of retirement is looming – and the fallout will be disastrous | André Spicer | The death of retirement is looming – and the fallout will be disastrous | André Spicer |
| Five million people who bought annuities before the introduction of pension freedoms remain locked in with no legal way to exit. A new campaign, Your Pension: Your Choice, is demanding that the government releases them from the annuity “trap”. | Five million people who bought annuities before the introduction of pension freedoms remain locked in with no legal way to exit. A new campaign, Your Pension: Your Choice, is demanding that the government releases them from the annuity “trap”. |
| A campaign spokesman said: “Reduced expectations of longevity among annuity holders prove the government should now revise the rules which trap customers into these agreements. | A campaign spokesman said: “Reduced expectations of longevity among annuity holders prove the government should now revise the rules which trap customers into these agreements. |
| “Many annuity holders now want the option of greater flexibility to shape retirement income which best suit their needs. Extending pension freedoms to the 5 million pre-2015 retirees would do a great deal to alleviate this issue.” | “Many annuity holders now want the option of greater flexibility to shape retirement income which best suit their needs. Extending pension freedoms to the 5 million pre-2015 retirees would do a great deal to alleviate this issue.” |
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