As the number of centenarians living in England and Wales soars, there is growing pressure upon people to save for a longer retirement, warns the pensions industry.
New figures from the Office for National Statistics revealed that over the past century, the number of centenarians living in England and Wales has increased 127-fold, reaching a record 13,924 in 2021. It marks a 24.5% increase from 2011.
Male centenarians in 2021 had outlived their life expectancy at birth by four decades and female centenarians by three decades. It is a phenomenon that is expected to continue to grow, with almost one in five females born in 2021 expected to live until age 100, along with 14% of boys.
However, the data has shone a spotlight on the pressing need to plan for a longer retirement, say experts.
Megan Rimmer, chartered financial planner at Quilter, said: “Life expectancy can vary hugely based on events outside of our control. For example, it tends to increase in bursts corresponding to medical breakthroughs but can be hindered by unpredictable events such as the Covid-19 pandemic. This means everyone should plan their retirement around the very realistic possibility of living to 100.
“Building a pension pot that can support you for that long is not easy but it will be considerably more achievable the earlier you start.”
While auto-enrolment has resulted in many more young people contributing to a pension, Rimmer warned that at current levels, some may still not be saving enough to fund an increasingly longer life.
“For those who are further on in their working lives, it is important to remember that it is never too late to start saving as something is always better than nothing and any pension contributions you make in later life can still have a big impact on your standard of living in retirement,” she added.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown said the ONS data highlights the growing pressure the state pension is being placed under.
She said: “We’ve now hit a point where further state pension age increases risk exceeding many people’s ability to keep working and this is causing the government a real headache. The triple lock has ensured state pension increases have been decent over the past decade, but it has not been without its challenges. A 10.1% increase earlier this year was much welcomed by pensioners struggling with the cost-of-living crisis, but next year’s increase also looks to be huge – in excess of 8%. This has led to rumours of the government looking to adopt a lower wages number in a bid to manage costs and stoking rumours that even if it continues in the short term overall the triple lock’s days are numbered.
“A review of the state pension and the triple lock’s role within it is needed to give pensioners more certainty on what they can expect to receive and when to help them with their retirement planning.”
Against this backdrop, Morrissey urged people to consider their own pension planning, particularly with a question mark continuing to hang over the issue of social care.
Morrissey added: “The extension of the auto-enrolment bill continues its way through Parliament and aims to reduce the minimum age for auto-enrolment to 18 and allows pension saving from the first pound. This will all help but it’s clear we need to do more to help people build a decent retirement pot.
“The issue of social care also looms large here. If we are living longer then the likelihood is more of us are going to need to fund care at some point. Right now, this is eye-wateringly expensive with family finances coming increasingly under strain. Moves to cap personal care costs at £86,000 and raise the threshold by which people receive help were welcomed when they were first announced but have since been kicked into the long grass. However, it remains a hugely important area that needs to be addressed.”
