Life expectancy amongst affluent men rising faster than the rest of the UK

In our second longevity trends research report, in collaboration with the PLSA, we find that life expectancy of affluent men in the UK is rising faster than any other group.

26 June 2017

Pension schemes need to recognise continued rise in longevity as over half of liabilities are in this group.

  • Between 2011 and 2015 affluent men continued to see strong rises in longevity, equivalent to 17 weeks of extra life expectancy while other groups saw no increases.
  • Often half (or more) of a pension scheme’s liabilities will be in this ‘comfortable’ group.
  • Having an insight into the socio-economic dynamics of longevity trends has never been more important.
  • Recent divergence in life expectancy amongst socio-economic groups is likely to be caused by a combination of factors including flu, economic slowdown, harsh winters and access to social care.

Life expectancy amongst affluent men in the UK is rising faster than any other group, and faster than the national trends seen over the last five years, according to a Longevity trends report published today. The report from the Pensions and Lifetime Savings Association (PLSA) in conjunction with longevity experts, Club Vita – suggests that this trend could have significant implications for Defined Benefit (DB) pension schemes as typically over half of their liabilities will be in this ‘comfortable’ group.

The report shows that between 2011 and 2015 men in the ‘Comfortable’ group1 continued to see rapid rises in longevity, gaining 17 weeks of life expectancy. This maintained the trend of steadily increasing longevity from the previous 10 years.

In contrast, for men in the ‘Making-Do’ group2 and ‘Hard Pressed’ group3, life expectancy has remained unchanged since 2011. For women, life expectancy has increased a little since 2011; increasing by 4 weeks for the ‘Making-Do/Comfortable’ group and 9 weeks for ‘Hard-Pressed’ group.

Commenting on the importance of the findings for pension schemes, Steven Baxter, Head of research and development, Club Vita says:

“For pension schemes, having an insight into the socio-economic dynamics of longevity trends has never been more important. Trustees of DB schemes are faced with tough decisions to make. Standard actuarial projections have shown a slowdown in rising life expectancy and some have even questioned whether DB schemes should be funding for future, uncertain, increases in longevity. However, our evidence that life expectancy is still rising at the same pace amongst affluent males is highly significant.

“For the majority of DB pension schemes the liabilities are concentrated amongst the more affluent men. This group appear to have been resilient to the events of recent years. It is vital that schemes recognise this to ensure they are using appropriate longevity assumptions. Gone is the day of ‘one size fits all’ for longevity projections.”

Commenting on the reasons for the divergence, Steven continues:

“While the nation has seen a slow-down in rising life expectancy over recent years our analysis has shown that men in ‘comfortable' socio-economic groups are, in contrast, maintaining a consistently rising life-expectancy. There has been a divergence in longevity expectations between these groups and the lower socio-economic ‘making do’ and ‘hard pressed’ groups, with the longevity improving twice as fast for the ‘comfortable’ group. At a societal level it is concerning to see a halt in the narrowing of the longevity gap amongst different parts of society that we had seen previously.

“It is impossible to say definitively what is causing this disparity. It could be due to one off events such as the flu vaccine failing to provide protection against a particular flu strain, or an especially harsh winter. It could also be the impact of austerity measures making life a bit harder for those who don’t have as easy access to support networks, or alternative resources to buffer them from changes in the social care system. In reality it will be caused by a combination of all of these types of elements. What is certain, though, is that the ‘comfortable’ group are proving to be more resilient.”

Graham Vidler, Director of External Affairs, Pensions and Lifetime Savings Association (PLSA), said:

“This is an important piece of research for UK defined benefit pension schemes as it highlights that ‘one size does not fit all’ and that using standard actuarial projections may lead to misleading funding assumptions. Clearly, a scheme with a high proportion of more affluent members might need to make more provision than a scheme with a more mixed demographic.

“Pension scheme trustees and managers have to take a view on the outlook for longevity many decades in the future. This report is designed to help with better decision making and scheme management. It will enable schemes to react to recent trends in a way that is appropriate to their circumstances and will provide a more nuanced evidence base than general data or generic data models.”

1. ‘Comfortable’ group: Higher levels of retirement income (over £7,500 p.a. unless living in the least deprived 20% parts of the UK when this can be reduced to £5,000 p.a.). This group naturally includes some pensioners with retirement incomes much higher than £7,500.

2. ‘Making-Do’ group: Modest retirement income levels and living in areas of average to low levels of deprivation.

3. ‘Hard Pressed’ group: Living in more deprived areas and generally with lower levels of retirement income. 

Club Vita Canada also recently published the key findings from their first annual study of defined benefit pensioner longevity. It's interesting to note that their findings mirror the findings of Club Vita in the UK. To find out more you can read their press release here.

About the Pensions and Lifetime Savings Association

We’re the Pensions and Lifetime Savings Association; the national association with a ninety year history of helping pension professionals run better pension schemes. Our members include over 1,300 pension schemes with 20 million members and £1 trillion in assets, and over 400 businesses. They make us the voice for pensions and lifetime savings in Westminster, Whitehall and Brussels. Our purpose is simple: to help everyone to achieve a better income in retirement. We work to get more money into retirement savings, to get more value out of those savings and to build the confidence and understanding of savers.

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