Letters | 11 January 2018

Long lives and pension pots

Sir: Jon Moynihan is too optimistic about the prospects for further increasing life expectancy, and too gloomy about those of the pensions industry (‘Falling Short’, 6 January). The wondrous advancements of medical science have offered little to solve the most pervasive problem we now face: declining mental health. It seems unlikely that society will chose to invest endlessly in repairing bodies to extend lifespans, when the minds relating to those bodies have already been lost.

So the viability of pension providers is not as parlous as suggested. Indeed, many current fund deficits derive from the low investment yield environment that central bankers have engineered but which is not sustainable in the long term — the timeframe in which pension funds measure their liabilities. When more normal investment conditions return, the actuarial assumptions used in funding those liabilities (and they are always just assumptions) will greatly enhance the viability of pension provision.