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Life expectancy falls: so why is state pension age increasing?

queen 595685 640 1Here’s a cheery fact: apparently, we are not all living longer. Those fun-loving guys at the Continuous Mortality Institute - part of the Institute and Faculty of Actuaries – say that life expectancy improvements between 2011 and 2017 were “significantly lower” than any other recent six year period. And a report last year by academic Sir Michael Marmot said average life expectancy increases had “more or less ground to a halt”.

So, fewer telegrams for the Queen to send out... but on a more serious note, what about state pensions? Financial firm A J Bell points out that the state pension age for men and women is set to rise to 66 for men and women by 2020, before increasing to 67 by 2028 and 68 by 2039 – seven years earlier than under previous plans. The reason why we are waiting longer for our state pensions is meant to be because we are all living longer – but these reports suggest it might not be the case.

But don’t hold your breath for a change. Tom Selby at A J Bell says: “The reality is the Government’s decision to increase the state pension age has been decades in the making and anyone desperately hoping for a Government U-turn shouldn’t hold their breath. When the modern state pension was introduced just after the Second World War, a 65 year old could expect to spend just over 13 years in receipt of it. By 2017, this figure had risen to almost 23 years”.

Indeed, it’s probably true that our children will have to wait into their seventies before they get a state pension (if such a thing still exists by then). But there are actions we can all take. Firstly, find out what state pension you will actually get – you need 30 years of National Insurance contributions to get the maximum one. You can get a forecast here. Secondly, it’s probably safe to assume that the state pension won’t be worth a great deal when you actually get it. Currently, the maximum state pension is £159.55 a week: you’re hardly going to be able to live a life of even moderate luxury on that. Thirdly: do it yourself. You can contribute to a pension even if you haven’t got a job. See our brilliant guides to pensions here.

A final thought. I once used to work with someone with a rather morbid outlook who introduced me to the delights of this site – www.deathclock.com. It lets you work out when you are going to die. My number’s up on 13 February 2038: unlucky 13, indeed....

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Monday, 22 April 2019