Pensions body blasts life proposals

LONDON (Reuters) - The pensions lobby group on Friday hit out at watchdog proposals to make schemes use more conservative mortality assumptions, saying it will put them under unnecessary pressure.

The Pensions Regulator wants companies to assume the average 65-year-old retiring today will live until the age of 90, around five years longer than most companies currently assume.

The proposals, known as the long cohort, would add tens of billions of pounds to pension schemes' liabilities and have come under heavy fire from the industry.

The National Association of Pension Funds (NAPF) has now added its voice to the chorus of disapproval.

"The NAPF believes selection of the long cohort projection ... will have unintended consequences," the NAPF said in a statement.

"It will push trustees to adopt this assumption in all circumstances, even when not justified by their scheme-specific circumstances or when sufficient prudence has been exercised in the selection of other valuation assumptions."

Using the long cohort will ramp up liabilities, forcing employers to pump extra cash into their schemes and increasing the risk they will close defined-benefit plans, the NAPF said.

The evidence for continuous increases in life expectancy that underpins the long cohort assumptions is not conclusive, so firms should not be forced to adopt it, the NAPF added.

The consultation period on the proposals has ended with final guidelines due soon.

(Reporting by Simon Challis; editing by David Hulmes)