Pension consultancy LCP has warned that life expectancy trends in the UK may be reaching a turning point, which could impact the wider retirement system.
The firm’s latest analysis examines recent mortality data alongside findings from a pension risk transfer market survey, concluding that assumptions about how long people live could soon shift upwards again.
Such a reversal would carry significant consequences for pension scheme funding and could push up pricing across the risk transfer market.
LCP is advising trustees and sponsors to reassess their longevity assumptions regardless of their chosen endgame approach.
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Analysts note the widely used CMI mortality projections model, which trustees and sponsors rely upon across the industry, may soon deliver notable changes based on emerging evidence from this year.
Data gathered during 2026 indicates the forthcoming model update could produce life expectancy increases exceeding those seen in the two previous releases, though calibration choices will determine the final outcome.
Meanwhile, LCP’s survey of insurers reveals that longevity assumptions within the pension risk transfer market have plateaued after years of decline, showing minimal movement between late 2024 and the end of 2025.
Should these assumptions begin climbing again, pension schemes face the prospect of higher liabilities and increased costs for longevity swaps and buy-ins.
Falling life expectancy could result in a shock for the pension system
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Cancer detection methods are becoming more accessible through blood, urine and breath tests, which could substantially boost survival rates through earlier diagnosis.
The NHS faces mounting pressure from an ageing population, requiring either greater investment or significant efficiency improvements to sustain care quality.
Artificial intelligence offers encouraging possibilities in diagnostic tools and pharmaceutical research, though its ultimate effect on lifespan remains unclear.
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Stuart McDonald, a partner and the head of Longevity and Demographic Insights at LCP, said: “After several years of falling life expectancies, the latest data suggests we could be at an inflection point.
“There is a real chance that future updates push life expectancy assumptions higher again.”
He emphasised that trustees and sponsors must monitor the evidence closely and grasp how swiftly funding positions and pricing might shift.
Ben Rees, a partner at LCP, added: “Trustees and sponsors have become used to CMI updates lowering life expectancy. The last two models break that pattern; for many schemes, adopting the core model out of the box could significantly increase liabilities.”