11 Jul 2019

Report: IAS19 Assumptions Report

Hymans Robertson’s annual IAS19 assumptions report analyses the key assumptions adopted by the FTSE 350 for their defined benefit pensions disclosures as at 31 December 2018. These assumptions are critical for measuring pension liabilities to assess the financial wellbeing of UK plc.

The report considers the main financial assumptions (primarily the discount rate and inflation) and life expectancy. This year’s survey also considers the provisions made for guaranteed minimum pension equalisation, following the High Court ruling in October last year.

Key findings

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 slowdown 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 consumer price index wedge of 1.1% this year, compared to the average assumption we’ve seen for many years of 1.0%.