What does a decline in life expectancy mean for state pensions?

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Life expectancy at birth has reduced slightly different speeds in areas of the UK

According to data from the National Bureau of Statistics (ONS), the average life expectancy at birth was 7.8 weeks, a decline of 11 weeks in Scotland between 2018 and 2020.

The pandemic appears to be the reason for the sudden falls, with a “severe reduction” in life expectancy compared to the 2015-2017 period.

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Although not the same amount in each region, life expectancy has decreased in most parts of the UK.

A significant drop in life expectancy for men at birth was seen in the Northeast (16.7 weeks) and in the Yorkshire and Humber (8.8 weeks).

For women, life expectancy declined in the West Midlands (9.9 weeks), but increased significantly in the Southwest (17.7 weeks).

Tom Selby, head of retirement policy at AJ Bell, commented: . ”

“These life expectancy is not spreading equally across the country. In fact, men born in the northeast have experienced an incredible 16.7 weeks’ average life expectancy, while men born in the southwestern region have actually experienced an incredible decline. We’ve seen an improvement in life expectancy of 5.7 weeks.”

The numbers raise questions about what the impact on state pensions is.

“These significant reductions in average life expectancy will inevitably put pressure on the government to reconsider the planned increases in state pension age in 2028,” Selby says.

The large differences in life expectancy across different parts of the UK could rekindle debates about the flexibility of state pension schemes.

“The current framework means that state pensions cannot be accessed until they reach the state pension age. That means that people with low average life expectancy can retire on average and earn less income from the state. One of the ideas that often pop up is to allow people to access state pensions early, but are reduced by percentage. This may be expected to live a fewer longer. It may not help certain groups, but you need to be careful to become more complicated than what is already a complex system.”

“It makes sense to start this argument given the devastating impact that Covid has had on all of our lives, especially our life expectancy. Changes in state pension age have been planned for a long time. It is designed to reflect long-term improvements in life expectancy.”

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