IAS19 Assumptions Report
11 Jul 2019
FTSE 350 companies support £700bn of defined benefit pension liabilities. These same companies have a combined market capitalisation of £2,300bn, so the way these liabilities are measured in company accounts is critical for assessing the financial wellbeing of UK plc.
Our annual IAS19 assumptions report analyses the key assumptions adopted by the FTSE 350 for their defined benefit pensions disclosures as at 31 December 2018. We consider the key financial assumptions (primarily the discount rate and inflation) and life expectancy. In this year’s survey we have also considered the provisions made for GMP equalisation, following the High Court ruling in October last year.
Key findings this year include:
The impact of GMP equalisation was 0.5% of liabilities on average.
Average life expectancies were 0.2 years lower than last year, with companies adopting the latest mortality tables which are based on a further slow down in longevity improvements.
Discount rates were more bunched than last year with 88% of companies using a discount rate within 0.1% of the 2.8% average.
A significant minority of companies (35%) used a CPI wedge of 1.1% this year, compared to the average assumption we’ve seen for many years of 1.0%.
Download the full report below. If you have any questions about anything covered in the report, please don’t hesitate to get in touch.