Longevity: An admission of misinformation?
The employers’ pension forum site has silently adjusted a claim it made about the impact of longevity, when it was pointed out to them that their stats were incompatible with those of the Office of National Statistics. The figures they used were not credible, and plainly overstated the case by a considerable margin compared to the official statistics. When they were contacted about their original statement, they made no acknowledgement of the communication, but changes were made to their website. Here’s the wording on their website before they were told they were hugely inflating the figures:
And here’s the wording after:
Misinformation? You decide.
Longevity does certainly play a factor in deciding future benefit, but it acts here as a smoke-and-mirror tactic. The key reason for a growth in the notional deficit is an new investment strategy of ‘de-risking’ which involves quite consciously increasing the notional deficit by investing more in low-yield investment vehicles. The UCU are arguing for a more sensible and growth-assuring investment plan. Issues of longevity are left in the shade by these matters, but are often wheeled out to convince people to stay on-side as they are far more easy to communicate and understand than, for example, future gilt yields. But what we have yet to learn is – to what degree did these extreme and inaccurate predictions of longevity impact on the calculations that are now being used to justify detriment to your pension? By the fuss they have made about longevity, one would expect the impact to be quite significant… We will blog more on this soon.
We’re grateful for the work of colleagues at Warwick UCU for revealing the above material: http://blogs.warwick.ac.uk/dennisleech/entry/uss_employers_shown/