‘Worsening longevity’ raises questions for SPA increase

Longevity is falling and people are dying younger than expected, raising questions for Government plans to increase state pension age, says Quantum Advisory.

The actuarial firms points to figures from the Continuous Mortality Investigation (CMI) that show that not only have improvements in mortality slowed, but that longevity has actually started to reduce for some age groups.

The life expectancy of a 25-year-old fell from 87.6 years in the 2014 CMI tables to 87.4 years in the 2015 CMI tables. Females aged 25 saw a fall in their projected lifespan from 89.6 years in the 2014 figures to 89.3 years in the 2015 figures. The 2016 CMI tables are due out on Monday and is expected to show further reductions in longevity for those in their 20s.

Earlier this week a major report by John Cridland argued that workers under the age of 45 may have to wait until they are 68 before they can draw their pension, while a document for the Department for Work and Pensions (DWP) suggested those under 30 may not have access to theirs until they reach 70.

Quantum Advisory partner Stuart Price says: “It is too early to say definitively if this trend is set to continue into the future, however, having seen two years of worsening improvements, maybe it is time to change the widely held view that we will all continue to live longer. Mortality is a key assumption when setting the State Pension age, so the Government may be premature looking to increase the age even further at this current point of time.

“Why is our mortality getting worse? The much-publicised financial distress of the NHS is widely perceived to be a major contributor behind the recent increase in younger mortality in the UK. However, there is evidence that early mortality rates are also going up further afield. In the USA, for example, overall mortality increased from 2014 to 2015 – the first such increase in 20 years. The main causes of this increase have been attributed to the significant rise in deaths from Alzheimer’s which, when combined with Dementia, is the leading killer in the UK. Liver disease is also on the up largely put down to increasing drug and alcohol consumption.

“The CMI carries out research into mortality and morbidity experience and will shortly be publishing its 2016 mortality improvement tables which look set to reflect this recent experience in the UK. The 2015 tables showed lower life expectancies than the 2014 version and the new 2016 tables are expected to show a further reduction.”