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The Actuary The magazine of the Institute & Faculty of Actuaries

Carry on living longer - ONS figures and the state pension

New life expectancy projections published by the Office for National Statistics suggest that people will live considerably longer than was assumed when the government decided how quickly the state pension age should go up.

According to Rash Bhabra of Watson Wyatt, “The government intended that, immediately after each increase in state pension age, men could expect to claim their state pensions for an average of just under 21 years and women for 23 years. You would need to increase the state pension age to 66 almost overnight to achieve that based on the latest projections.”

Contrasting the government’s reduction in state pension promises, he points out: “Companies with final salary schemes are grappling with precisely the same issues. Unlike the government, however, they cannot simply move the goal posts and change the pensions they have promised when life expectancy improves.