The above question is not dissimilar to the well known theoretical challenge of:

“How long is a piece of string?”

The answer to both may well be “it depends”, but at least we can base our pension response on the life expectancy tables helpfully produced by the Office of National Statistics (ONS) on a regular basis. And only last week the latest ONS findings (for England and Wales) were released.

The findings were broken into two. Life expectancy at birth, and life expectancy at age 65.

The second of these two options may well be the more pertinent to our opening question, as 65 is the age that most people still equate with retirement age. So, for life expectancy at age 65, we could instead read;

“How long (on average) will I need a pension to be paid to me before I shuffle of this mortal coil?”

And the answer is that the payment period is continuing to grow.

In the period 2000 – 2002, the ONS found that average life expectancy at age 65 was 16.09 years for a male, and 19.19 for a female.

Last week’s figures (for the years 2009 – 2011) found that male life expectancy at age 65 is now 18.35 years, and 21.00 years for a female.

The actual impact of these changes varies widely by region. For instance the worst male life expectancy at age 65 is currently in Blackpool (16.2 years), the best in East Dorset (20.9 years). Yet these figures are still significantly higher than the equivalent worst and best findings from 2000 – 2002 (14.1 and 18.9 years respectively).

What this clearly shows is that life expectancy in all regions is improving, which in pension terms means that both sexes, regardless of location, can expect to benefit from around 2 years extra pension payments than those retiring less than a decade previously.

Of course this is good news, but it does also highlight the need for employees to start saving early, and take an interest in their retirement savings to ensure the best outcomes. Likewise employers need to understand that it will be increasingly challenging for employees to amass a suitable sized fund to trigger a financial decision to retire (something that is now more relevant to employers since the abolition of the Default Retirement Age).

Auto-enrolment is the first step in the journey, and it seems likely that this measure will remove the initial barrier to commencing pension savings for many. Thereafter employees and employers alike have a vested interest in ensuring that professional support and assistance from the pensions industry is provided to ensure that the best possible retirement outcomes can be delivered at the end of the employee’s working career.

Best regards,

Steve