1st September 2015
The state pension age looks set to hit at least 70 by 2050, the latest official life expectancy data suggests.
Figures published by the Office for National statistics (ONS) today show that over the last 100 years life expectancy at birth has increased by nearly three years per decade and that people aged 60 could expect to live about nine years longer in 2010-2012 than 100 years earlier.
Malcolm McLean, senior consultant at Barnett Waddingham, the actuary, says: “Although no-one has a crystal ball and can’t be sure for certain what the future may hold for us all, the ONS figures do raise the possibility of many more people in this country living well into their nineties by the second half of this century.
“Using the formula now proposed by the government that future generations should spend up to a third of their adult life in retirement it is very likely that state pension ages will have to rise much faster than currently anticipated, almost inevitably reaching at least 70 by the mid-point of the century.
“Longer working lives will surely become the norm for today’s younger generations , something they will have to accept in thinking ahead for their plans for retirement and how they are going to finance them.”
Tom McPhail, head of pensions research at Hargreaves Lansdown, says: “This continued improvement in life expectancy carries an important risk warning for those reaching retirement and drawing on their pensions. It is vital to ensure you have made financial preparations to meet your income needs well into your third, or even your fourth decade of retirement. For many people, an annuity will continue to be the logical retirement income choice for at least part of their pension fund.”
“If you are using drawdown to pay a retirement income then you don’t want your 90th birthday to come as an unwelcome surprise; it is essential to make sure that your income withdrawals and investment strategy remain sustainable over the long term.”