Arun Muralidhar’s excellent presentation to the Pension PlayPen is up and for those who are time challenged on a Tuesday Morning, here is a chance to watch it again.
Thanks to all who participated in an important debate/
"one of ten websites and blogs every investor should bookmark"- The Times.
Segmentation
Life expectancy is often expressed as a single number but drill deeper and look at the relationship between life expectancy and income a very different result is observe the bottom 1% at age 76 and the top %1 at age 101
Since most small pots will be for those at the lower income levels a simple indexed annuity could be provided by any number of suppliers and if it were Government then the profit could make a dent in the national debt.
The problem is not a two dimensional matter more a surface.
John, the income is paid for a guaranteed fixed period of say 20 years (age 65 to 85) and therefore there would be no mortality profit from earlier death.
We know that those with higher incomes tend to live healthier and longer lives but an upper life expectancy of 101 looks too high! What is the cohort? Are you saying that for those who retire at a certain age (maybe 65) then the 1st/100th percentiles of income lead to life expectancies of 101/76? Source?
Chris
I sent the source data to Henry. Based of mortality data from 2016. I can’t pin the graphic in the blog.
Surely none would buy a term limited to 20 years Or like real whole of life insurance has the product disappeared
John
John,
If the poorest, who would be reliant on SeLFIES, aren’t going to survive 20 years then they don’t have a problem! For the minority who do survive, the government could step in. Indeed, I can foresee a situation in the future (20/30/40 years time?) where the UK State Pension is essentially a means tested safety net in later life – the Aussie system!
Maybe those below a certain age should pay a lower rate of National Insurance contributions with the reduction mandated to SeLFIE purchase.
Chris
Henry, re John’s comment above, could you pin the source data/graphic to the blog?