The finance industry is preparing itself for rising costs as life expectancy continues to rise and so does the cost of providing pensions and annuities. Recent figures show that a one-year increase in life expectancy could mean a £10 billion increase in the total cost of the United Kingdoms private sector pensions bill.
Life Insurers could be forced to add an additional £3 to £4 billion to their reserves. Data provided by the Institute of Actuaries shows that life expectancy after age 65 is growing very rapidly, more than it has done in the past 10 years. A man born in 1950 will, on average, live to be nearly 90.
Our view
We have all been expecting this. Expect life insurance premiums to fall, expect pension annuities to become less competitive, expect the costs of care in older age to rocket. Now, more than ever, you need to take professional retirement advice.