UK life expectancy growth slows dramatically
According to the Office for National Statistics (ONS) data on UK longevity, between 2011 and 2016, mortality improvements have slowed down across England, Ireland, Scotland and Wales.
Life expectancy for females at birth rose by just 1.2 weeks a year from 2011 to 2016, compared with the 12.9 week annual improvement from 2006 to 2011. This takes life expectancy to 82.9.
For males at birth, the figure improved by 4.2 weeks a year, significantly down on the 17.3 weeks reported for the previous six-year period. Life expectancy for me stands at 79.2.
Mortality rates for those aged 90 years and over in the UK have shown no improvement since 2011 and for those aged 15-54, mortality rates have worsened since 2012.
The ONS cited increases in mental and behavioural disorders such as dementia for the slowdown for older generations, as well as a step away from physical labour towards jobs in the service sector.
Comparing these rates to those in other countries in the developed world, the UK’s life expectancy improvements mean it comes very near the bottom of the league table.
In the most recent six years, the UK has fallen to bottom of an international league table of life expectancy improvements for women, and second bottom for men, after the US.
Blip or the beginning of the end?
Tom Selby, senior analyst at AJ Bell, said: “The most recent available data places the UK right at the bottom of the developed world when it comes to life expectancy improvements in recent years. While this may seem shocking, it needs to be placed in the context of a long period of rapid longevity increases – particularly in the West.
“What we don’t know is the extent to which this is the beginning of the end of life expectancy improvements in the UK or simply a temporary blip.
“If life expectancy improvements do grind to a halt – or even go into long-term decline – it will have huge ramifications not just for government, but for society as a whole.
“It is no exaggeration to say this could yet prove to be the biggest public policy challenge of our generation.”
What this means for pensions
Slowing life expectancy improvements could be good news for defined benefit (DB) schemes, and could lead to better annuity rates, according to Selby.
He said: “DB schemes might be able to cut their liability estimates and eliminate troublesome deficits quicker than expected. We could also see annuity rates improve if insurers believe they will pay out guaranteed incomes for a shorter period of time.”
But stalling longevity improvements may reduce the amount the state pension costs over the long-term, but it’s unlike to impact the state pension age which will rise to age 68.