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Andrea Felsted is a Bloomberg Gadfly columnist covering the consumer and retail industries. She previously worked at the Financial Times.

Elaine He oversees Bloomberg Gadfly's data visualization work in Europe and also pursues her own columns combining business and markets coverage. Before joining Bloomberg, she was a graphics editor at the Wall Street Journal and the New York Times.

The Grim Reaper has some happy news, but if pension funds turn this into a party they're dicing with death.

Continuous Mortality Investigation Ltd., which produces longevity projections using data on lives that are insured or in pension plans, said the average life expectancy of men and women aged 65 declined in the past two years. The greatest reductions in projected lifespans were seen at the oldest ages.

PwC has estimated that if this trend continues, the deficits of U.K. corporate pension plans could shrink by 310 billion pounds ($396.3 billion). So there could be good news ahead for these companies and for insurers, as their liabilities get bigger the longer pensioners hang around.

In the U.S., the celebrations have already started. The American death rate rose slightly for the first time since 1999, prompting firms including Verizon Communications Inc. and General Motors Co. to cut estimates of future payments to their retirees, Bloomberg News reported. This worsening mortality picture reduced the combined pension liabilities of at least 12 large companies by $10 billion.

The CMI only released its projections a few months ago, and the full-year 2017 British earnings season hasn't hit yet, so there's little news yet on which U.K. businesses, if any, will adjust their models. But insurers and company pension plans shouldn't rush to revise assumptions about how much they need to set aside to meet their future obligations, and investors should watch closely to see if any of them introduce changes.

After all, this isn't the first time the gains in life expectancy that have marked out the last 40 years or so has stalled. Even as recently as the 1990s estimates showed a decline, only to be swiftly replaced by a return to the upward trajectory.

And the poorer social care that academics say may be dragging down the life expectancy outlook doesn't need to be a permanent feature of British society. Since the global financial crisis government spending cuts have coincided with a sudden and sustained increase in the number of elderly, and in those suffering from dementia, according to the Institute of Health Equity. Though the financial constraints on care are unlikely to dissipate any time soon, neither is public concern over standards of treatment for the elderly, particularly as increasing numbers people approach old age themselves. That could be a powerful break on any austerity-related increase in mortality. 

Despite the recent downturn, the long-term trend is still for longer lives. It would take a sustained increase in mortality rates -- which actuaries plug into their models to figure out how long we will all live -- to reverse this trend.

And the CMI has noted that the life expectancy of those in defined benefit pension schemes is holding up better than for the general population. That's another reason why lags in longevity shouldn't be an excuse for abandoning pension prudence. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the authors of this story:
Andrea Felsted in London at afelsted@bloomberg.net
Elaine He in London at ehe36@bloomberg.net

To contact the editor responsible for this story:
Jennifer Ryan at jryan13@bloomberg.net