Increasing life expectancy will add £5bn to pension costs

People are living longer than was predicted a decade ago

People are living longer than was predicted a decade ago

Life expectancy has increased again from 2009, with men currently expected to live an extra 0.4 years and women another 0.8 years. The increases in longevity will mean added costs to both public and private pension schemes.

Actuaries said mortality rates have continued to fall among all age groups from 18 to 102, with death rates falling 4.4% for men in 2009 and 6.2% for women in 2009. The firm Aon Hewitt said the findings would add a further £5bn to the cost of funding occupational pension schemes.

Increasing life expectancy has been a major impetus for the recent decision to speed up a rise in the state pension age to 66, which the government hopes to enforce by as early as 2016.

Recent research by insurer LV= also revealed that as many as 4 million over 50s are likely to work beyond retirement age due to not being able to afford to retire.

Samir El-Alami of said: “It is understandable that the government wants to increase the state pension age. With constant improvements in medical science, we see a year on year increase in life expectancy. What worries me is that we do not see an increase in the amount of money saved for retirement – in fact, we often see the reverse.

“With these two facts in mind, it is important the government incentivises people to save for their retirement as young as possible and as much as possible, or the reliance on government subsidies will only get worse, not to mention the quality of retirement years for many Britons.”

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