Global FTSE 100 companies are underestimating their pension liabilities by tens of billions of Euros, a report by LCP has found.

According to LCP's 2014 Global Benefits Update report, sharp differences in mortality assumptions between countries and rising life expectancy are causing global firms to underestimate their pension liabilities.

LCP said that the differences in mortality assumptions among developed countries could be as much as five years, and this has "profound" implications for multinational companies.

The firm said that only a globally consistent approach to defining mortality assumptions, and a standardisation of calculations around the world, will avoid costly balance sheet surprises in the near future.

LCP added that the new IAS19 accounting standards are pushing companies towards this level of consistency.

Phil Cuddeford, LCP partner, said: "The findings on mortality rates should make for eyebrow-raising reading for companies around the world.

"Companies need to take a global perspective and seek to standardise their assumptions in order to ensure consistency of liability calculations otherwise they may find that balance sheet liabilities have become unsustainable."

First published 21.02.2014

monique_simpson@wilmington.co.uk