Age 90 ‘not out’ has huge impact on retirement planning
2 October 2019
As official figures show the number of people who reach their ninetieth birthday continues to grow, experts have warned that the government urgently need to deal with current retirement provision.
According to the latest data published by the Office for National Statistics, the number of people aged 90 and over in the UK has risen to 584,024. The numbers are partly driven by the number of births 90 plus years ago as well as improvements in life expectancy, the ONS said. The figures also showed the number of men reaching that age has risen more sharply than that of women.
It is now estimated that one in five males and one in three females born in 2016 to 2018 are likely to reach the age of 90.
Commenting on the figures, Aegon pensions director Steven Cameron, said: “For those using their pension pot throughout their retirement, there’s now a very real prospect of needing to plan for an income to last well into your 90s. With more people already reaching 90 and the expectation of this continuing to increase, there is also a greater likelihood of requiring social care in your later years and this needs to be paid for.”
Cameron said the figures may also prompt some people to rethink their planned retirement age, which may be why an increasing number of people are choosing to work beyond traditional retirement ages.
Helen Morrissey, pension specialist at Royal London, said of the data: “With people living 30 years past traditional retirement age, government must deal quickly with the ticking time bomb of lack of appropriate retirement provision by looking at whether auto-enrolment minimum contributions need to be raised to help people save more. Other workers may wish to work for a while after the age of 65 to bolster their pension and we need to ensure they are able to do so.”
Yet despite the rise in the number of people reaching 90, the data also found that the recent slowdown in overall life expectancy improvements has continued. People born between 2016 and 2018 have a life expectancy of 79.3 for men and 82.9 for women, marking an increase of 3.7 and 4.2 weeks respectively than those born in the 2015-17 period.
However, the figures for 2016 and 2018 were far lower than the average 15.4 and 10.9 weeks increase recorded in the same period a decade earlier.
The figures also rank among the lowest of 17 countries, with only Iceland and the US sitting below the UK.
Tom Selby, senior analyst at AJ Bell, said: “While it’s easy to be negative about the dramatic slowdown in life expectancy improvement recently, it is worth remembering we are now living longer than at any time before. However, policymakers cannot gloss over the fact life expectancy improvements have ground to a near standstill in recent years. If this trend continues or life expectancy were to slip into reverse, it could have profound implications both for people’s retirements and society in general.”
Selby said the government must understand why this is happening and reflect any long-term shifts across policy areas as a priority, but this was unlikely to include halting planned rises in the state pension age.
He added: “Anyone hoping for planned state pension age increases to be reversed is likely to be left disappointed. The cost of state pensions in the UK has been ballooning for decades and rowing back on these reforms would cost the Exchequer eye-watering sums of money.”
Origo is to launch Unipass Letter of Authority (ULoA) at the end of November, a service aimed at simplifying...
Professional Paraplanner’s publisher, Research in Finance (RiF), is a leading research company in the financial services sector. On occasion our readers...
While the aggregated costs and legacy trail commission regime remains far from perfect, some clarity can be gleaned, says...