In a recent article, Brian Spence identifies “a potential gap between the income needed and the actual pension income immediately after retirement followed by a period when an increasing element of disability results in a lower income requirement but also identifies for some pensioners and second peak in later life when the income need increases again as a result of disability and illness.”

When I do seminars and ask members if they think they’ll live to 80, very few say they do. Many people are worried about long term care but most of them think that the £40-50kpa cost of fulll care should fall on others and don’t see why they should provide for themselves. People who claim to be risk averse show remarkable insouciance about their late old age. If annuities could be provided for just twenty years, I am sure many people would go for higher immediate income with nothing to come after (say) 80.

Bearing in mind the current threat to annuity levels from higher reserving costs, I am sure the insurers would jump at the opportunity to swap out long-tail longevity risk to individual pensioners.

Our children may not be quite so happy with such an unholy alliance.