If you’re 65 , you just got 11 months older

Despite the euphoria with which this news has been greeted by the pensions industry, this is sad and bad news. While life companies can take hundreds of millions of reserved capital back onto their balance sheets and pension schemes reduce their deficits at their next valuation, this is bad news for Jack and Jill climbing down the hill after retirement.

The Continuous Mortality Investigation – set up by the Institute of Actuaries now says that the first real decline in life expectancy since the war in 2018, is only further evidence of a decline in the improvement in life expectancy dating back 15 years.

People are not going to have as long or as healthy a retirement as previously thought and that’s the sorry truth.

Time to roll back pension cuts?

There are lot of people in their fifties and early sixties who currently look forward to a belated state retirement age, based on out of date and overly pessimistic assumptions about longevity (I use the word pessimistic in an actuarial sense).

If the Government aren’t going to bring forward the retirement ages of those of us with SRAs of 67+, then they should have the grace to share some of the longevity “windfall” with current and future pensions by reserving the triple lock beyond well into the next decade.

Here is a Treasury windfall  of several billion pounds. Whether this will go towards rolling back recent delays  on the State Pension Age or be lost in Government accounting is anyone’s guess .

As for corporate DB plans, the decision to close for future accrual in favour of a DC alternative may look a little premature. Let’s hope that the CMI numbers bring down the cost of buy-out and steepen the glidepath for employers who want out or at least the comfort of self-sufficiency

An incentive to keep schemes open and convert DC to CDC.

Without over-egging the pudding, the large number of Britons still accruing a defined benefit pension should feel more comfortable about the security of that accrual.

CDC – for employers who have switched to DC but still want to provide a scheme pension looks more viable in the light of these CMI numbers. And for those individuals in DC looking for a wage for life from their savings pot – the annuity may just look a little more attractive.

Every cloud has a silver lining!






About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to If you’re 65 , you just got 11 months older

  1. Gerry Flynn says:

    The Government has already intimated that for pensioners living in the EU post 2020 if there is “no deal or there is no reciprocal agreement” the “triple lock” is likely to cease, so saving even more money for the Treasury.

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