As the FT notes this morning:
Up to £30bn could be wiped from UK corporate pension scheme liabilities owing to one of the biggest falls in life expectancy in a decade, according to industry experts.
The latest modelling by actuaries saw life expectancy assumptions at retirement age fall 1.9 per cent, or six months, compared with the previous year's model.
The logic is simple, of course. If people live for less time then the cost of funding their pensions falls. This applies to both government and private pensions, but since only private sector pensions are funded the gain goes, of course, to the companies with defined benefit pension schemes who will now have to pay less and to those pension companies that have sold annuities that will now last for shorter periods.
No wonder the FT is reporting this. Covid is providing a bonanza to business at a literal cost to the lives of everyone that are now likely to be shorter than expected.
The market will see this as a gain. What a warped world we live in.
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Reminds me of Yanis Varoufakis, in his book Talking to my Daughter about the Economy, who noted that all disasters add to GDP, every road traffic collision, every illness, every catastrophe, creates economic activity that somehow makes a contribution to overall economic “well-being”. Paints a fairly sickening picture. I’d rather see GDP split into 3:
1: economic activity that contributes directly to genuine wellbeing (sustainably).
2: economic activity that is destructive to genuine wellbeing, but, hey, it’s a job and I need to earn a living.
3: economic activity that tries to ameliorate 2.
It’d be interesting to see a paid/unpaid comparison.
I’m likely showing my ignorance here as I imagine someone has already done this work, but I’ve just never seen it. I also imagine much disagreement over where to place different activities and what counts as genuine well-being!
I very much doubt that data exists
Yes, a disaster does raise GDP – but we need to distinguish between the “stock of wealth”, GDP (annual income) and change in GDP.
An earthquake will destroy some of the stock of wealth and the response (to rebuild) will raise GDP…. but it is (A) the “stock of wealth” and (B) the absolute level of GDP that matters to our wellbeing – the Change in GDP which we tend to obsess over is only important in so far as (in the long run) it alters A and B.
Chinese growth rates have dwarfed Japanese growth rates for the last 30 years… but who has the best quality of life- (the median Japanese or median Chinese citizen?
And not forgetting theft David