Affluent male pensioner’s life expectancy is rising faster than other groups - as revealed by a new longevity trends report published by the Pensions and Lifetime Savings Association (PLSA) in conjunction with longevity experts, Club Vita.
The report suggests that this trend could have major implications for Defined Benefit (DB) pension schemes, as over half of their liabilities will be in this group - showing that a scheme with a high proportion of more affluent members might need to make more provision than a scheme with a more mixed demographic.
Between 2011 and 2015 men in this group continued to have rapid rises in longevity - gaining 17 weeks of life expectancy and maintaining the increasing trend from the previous 10 years, whilst other groups saw no increases. In contrast, for men on a modest retirement income and those who are living in deprived areas on a low income, life expectancy has remained unchanged since 2011.
The importance of having an insight into the economic dynamics of longevity trends has never been greater. Recent differences in life expectancy amongst socio economic groups is likely to be caused by a combination of factors - harsh winters, flu, access to social care and economic slowdown, to which issues the affluent group have proved to be more resilient.
Steven Baxter, Head of research for Club Vita states, “.......Trustees of DB schemes are faced with tough decisions to make. Standard actuarial projections have shown a slowdown in rising life expectancy and some have even questioned whether DB schemes should be funding for future, uncertain increases in longevity. However, our evidence that life expectancy is still rising at the same pace amongst affluent males is highly significant.”
He continues, “While the nation has seen a slow-down in rising life expectancy over recent years our analysis has shown that men in ‘comfortable’ socio economic groups are, in contrast, maintaining a consistently rising life-expectancy. There has been a divergence in longevity expectations between these groups and the lower socio-economic ‘making do’ and ‘hard pressed’ groups, with the longevity improving twice as fast for the ‘comfortable’ group. At a societal level it is concerning to see a halt in the narrowing of the longevity gap amongst different parts of society that we had seen previously.”
Graham Vidler, Director of External Affairs, Pensions and Lifetime Savings Association (PLSA) commented that trustees have to take a view on the longevity outlook for the future and this report was designed to help them with decision-making and scheme management.
