Savers need to be more aware of the consequences of an ageing population on retirement saving, with providers, regulators and employers all having a part to play in improving engagement, say experts.
Increasing life expectancy across the UK has significant impact on policy issues, notably the setting of the state pension age and the triple lock.
The ageing society, for this generation, is as big an issue for the world and this country as climate change
John Cridland, independent reviewer of the state pension age
With individuals living longer, there is a growing need for people to take more responsibility by saving as much as possible, and as early as possible.
The number of people in the UK of state pension age is projected to increase by 31 per cent to 16.1m by mid-2037, from 12.3m in mid-2012, according to the Office for National Statistics.
Raise awareness
Speaking at an event organised by the Association of British Insurers, independent reviewer of the state pension age John Cridland said: “The average voter is as dependent on the state pension as they are on their private savings, and too often we debate those two propositions in different houses.”
He argued that the government needs to do more to "reboot the state pension", while “we, as citizens, need to do more to save private savings”.
Life expectancy at age 65 for women increased to 20.9 years in 2013-2015 from 16.9 years in 1980-1982, according to ONS data.
For men, the data showed that life expectancy at age 65 has risen to 18.5 years from 13 years during the same period.
Many people are going to have to work later on in life. “Retirement ages need to edge up as we have the blessing of living longer,” Cridland said.
The industry has to stress the issue of increased longevity, and “bring that consequence home to people, and actually you can do it if you use much more accessible language”, urged Cridland.
Wealthy male pensioners buck national longevity trends
Rapidly rising life expectancy among older men will maintain high deficits for UK defined benefit schemes, according to a new report, despite flatlining mortality rates for other demographics.
“The ageing society, for this generation, is as big an issue for the world and this country as climate change — and this is in no way to devalue the significance of climate change,” he added.
He noted that, in spite of this, there is nowhere near as much media coverage on the issues related to an ageing population as there is on environmental concerns.
Educate from an early age
Tracy Blackwell, chief executive officer of the Pension Insurance Corporation, argued that it is all about adopting a long-term approach.
For building up long-term savings “all of the conversation… is how you give people financial advice now, but there’s no conversation about financial education [in government] for the young… you need to start early”, she said.
Lesley Titcomb, chief executive of the Pensions Regulator, stressed the role of regulatory bodies in improving communication and engagement. She said that “regulators are starting to be much more open to the idea of simplified, tailored, engaging information”.
She also highlighted how the vast majority of small employers do not have sufficient money or capability “to do much in terms of explaining complex workplace pensions issues to their staff, so you’ve got to try and create collaboration with the providers, because otherwise it won’t happen”.
