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Longevity growing faster than UK pensions age target

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  • Longevity growing faster than UK pensions age target

UK- Life expectancy may be growing at a faster rate in the UK than the government had anticipated, suggest figures from the Office of National Statistics, and may prompt the need for yet another review of the retirement age, consulting firm Watson Wyatt has suggested.

Data published yesterday by the ONS revealed the average male life expectancy for people turning 66 is expected to reach 20.6 years by 2011, and that figure is even sooner for females, suggested the consultancy, as the average 66-year old woman is expected to live another 23 years from 2010.

The UK government has recently announced it will review the state pension age but is currently scheduled to increase it to 66 from 2026 up to 68 by 2046, to match rising life expectancy based on median cohort life expectancy.

Yet analysis conducted by Watson Wyatt notes the retirement age may have to change "overnight" based on current calculations, if the government is to keep to its aim of maintaining a retirement age with another

The ONS calculations are produced every two years, and the latest mean cohort life expectancy projections show life expectancy has increased from 19.9 years after retirement for men in 2004 to 21.1 years by 2008, while that figure increased from 27.1 years among women in 2004 to 28.5 years by 2008.

Rash Bhabra, head of corporate consulting at Watson Wyatt, said the figures showed just how quickly mortality rates for different age groups will improve in the future.

"Companies with final salary schemes are grappling with precisely the same issues as they review mortality rates amongst their own members and budget for faster improvements in future than they used to allow for," said Bhabra. "Unlike, the government, however, they cannot simply move the goalposts and change the pensions they have promised when life expectancy improves."

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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