Commenting on the impact of the pandemic, Steven Baxter, head of innovation & development at Club Vita, notes: “These are the first ONS national population projections to include data from during the COVID-19 pandemic. The inclusion of some of the 2020 and 2021 data will take account of the large number of COVID-19 related deaths in the first 18 months of the pandemic. Very limited allowance has been made for the lingering after-effects of the pandemic which could have a greater impact on long term mortality trends. The projections largely consider the pandemic as “two lost years” for mortality improvements, with 2022 resuming where 2019 left off. We will need to keep a close eye on the emerging data to see whether this will indeed be borne out.”
Commenting on implications for the state pension review, Steven continues: “These population projections come hot on the heels of the government launching the latest review to changes in the state pension age. A key outcome of this review is whether the state pension age (SPA) increase to 68 should be brought forward from 2046 to 2039. These latest projections have downrated the outlook for future life expectancies compared to the projections underpinning the previous review. Using the new projections, and the previous review’s approach of seeking to maintain a 2 to 1 ratio of the years in adult life spent pre and post SPA, would suggest no immediate need for the rise of SPA to 68 to be brought forward.”
“Against a backdrop of the pandemic, any acceleration of increases to SPA will need to be accompanied by reassurance that disparities in life expectancy are being addressed. Otherwise those most reliant on the state pension risk being hardest hit, or the economic impact of a more affordable state pension system is diminished by a greater reliance on other benefits.”
Commenting on the implications for pension schemes and retirement planning, Mark Sharkey, head of client delivery at Club Vita, comments: “The latest projections downrate the outlook for future life expectancies. It is likely that the lingering after-effects of the pandemic will have a greater influence on life expectancy than the deaths directly attributable to COVID-19. We fear that the longer term economic and healthcare impacts have the potential to drive widening disparity.”
“As those responsible for the management of pension schemes consider how liabilities might be impacted, they need to look past the headlines to gain meaningful insights on pensioner life expectancy. It will be important to understand the bespoke socioeconomic and regional mix of a pension scheme’s membership and compare this with the emerging evidence on how the pandemic has impacted these individuals, rather than the general population.”
“Similarly, those advising on future retirement options should build up a picture of the bespoke characteristics of the individuals involved, rather than get caught out by the “flaw of averages” - where decisions based on general population trends are taken by individuals with very different characteristics to the general population.”
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