Pensioners could be given ‘death estimate’
22/04/2014
In a bid to get pensioners to stretch their savings out long enough to live the rest of their lives, retirees could be given ‘guidance’ on how long they have left to live.
The idea is that people will be given a ‘broad-brush’ estimate as to how long they might live, ultimately allowing people to plan their finances more effectively.
The Pensions Minister, Steve Webb claimed that many people underestimate how long they will live, meaning that they do not properly plan their finances for retirement.
He went on to say that based on various factors such as age, gender and if a person smokes, you could for example “tell somebody they might, on average, live for another 20 years”.
Face-to-face financial advice
The life-expectancy estimate would come as part of a plan outlined in the budget to get face-to-face consultations from financial advisers for pensioners.
These consultations would be paid for by the individual’s pension pot.
The minister claimed that whilst the issue of life expectancy will be handled sensitively within these consultations, there is “no point being all British and coy about it.”
Uncertainty
Some pension providers have expressed their concerns over these plans.
For example, David Robbins, a senior consultant at Towers Watson said that the “uncertainty” around estimating a person’s lifespan needs to be properly addressed. He said “This expectation could turn out to be wrong and is in any case only an average”.
He raised the point that the Office for National Statistics (ONS) assumes that all men aged 65 today will live until they are 86.5 years old. However, 22% of them will reach the age of 95, meaning that if those people were to live past the age of 86 they could run out of money depending on if they planned their finances based on government life-expectancy.
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