In England and Wales the life expectancy of people has risen unexpectedly, data from a report published by the Faculty and Institute of Actuaries last November has shown. This has raised further the issue of additional increases in the cost of providing pensions and the state pension age.
An extra year of life for a retired person typically means a pension scheme must increase its stock of assets by 3-4 per cent to generate the necessary extra income.
The Faculty and Institute of Actuaries said in their report that life expectancy had increased in 2009, despite data from the previous year indicating a ‘slowing down’ in mortality improvement, the rate of decrease in the death rate. ‘This trend has been partially reversed by the 2009 data for males, and wholly negated for females,’ the group said.
Chancellor George Osborne revealed in October last year that the state pension age would rise to 66 by 2020 to tackle the rise in longevity. Increasing longevity also puts pressure on public sector pension schemes, as well as on people who have not saved for their retirement. This issue is likely to affect a wide range of other areas, including healthcare and care for the elderly.
The figures calculated by the actuarial profession come from its long-running research project, known as the Continuous Mortality Investigation (CMI).
What the numbers show
The improvement in life expectancy is greatest for those who are oldest, particularly for men aged over 80 and women aged over 70.
The current projections suggest that a man who is 100 this year will live, on average, only a further two and a quarter years. This is a 3.7 per cent increase on the 2009 prediction.
By contrast a man aged 20 is predicted to live on average another 70 years, to the age of 90. This is only 0.2 per cent longer than was estimated in 2009.
Women aged 90 are expected to live a further three and a half years on average, which is 2 per cent more than last year.
But the improvement in life expectancy for women aged 20 has risen by just 0.3 per cent in the past year, to just under 92 years.