From The Scotsman, October 24 2005:

By Jennifer Hill

LEADING actuaries predict further improvements in life expectancy which would hit annuity rates and final salary pensions.

A paper by three leading experts, to be discussed at a sessional meeting of the Institute of Actuaries on Monday night, says mortality at age 70 could fall by three quarters over the next 40 years - equivalent to an average improvement of 3.5 per cent per year.

Stephen Richards, James Kirkby and Iain Currie say even relatively short-term projections are "eye-opening".

"Mortality at age 80 could fall by more than one half over the next 20 years," the paper says. "Put another way, 80- year-olds could be experiencing the same mortality rates in 2040 as 60-year-olds did in the 1970s."

This will have a "significant" impact on annuity business for life insurers and defined benefit pension schemes.

But the authors also emphasise the uncertainty in projections of future mortality.

Their research shows that patterns of mortality vary by the year of birth, with potential drivers being lifetime cigarette consumption, nutrition and exposure to infectious disease at early stages of life.

The most rapid improvement in mortality was found to be among the generation born around 1931.

© Copyright The Scotsman 2005. Original online article.