You living to 100? Now very likely but huge problem for pensions
Paternoster, a specialist insurance company which assesses risk associated with companies’ final salary/defined benefit pension schemes, have just announced findings which leave me with a somewhat bittersweet taste regarding my own longevity. They reckon that as many as 50% of 30 year olds living today will live to be 100 years old. That’s fine and dandy, but two major concerns jump to my mind and probably yours too - health problems in old age, and pensions.
Apparently new data released by the Office of National Statistics show that there has been a 90 fold increase in the number of people living to 100 years and Paternoster have seen their computerised ‘Capital Adequacy Models’ for the first time forecast the great likelihood that up to 50% of current 30-year-olds in pension schemes may reach 100 years old and they need to set aside adequate funds to pay these people’s pensions.
Because Paternoster are a regulated insurance company they must ensure that adequate funds are in place to deal with any such future scenarios - obviously if it’s scary for them, what about us? Imagine, even if your current pension contributions are well-funded and adequate enough to produce a livable income for you until the age of say 84 years old, which is roughly what most life tables currently work to ( 82 years old for males, 85 years old for females), there is obviously a large jump of at least 15 or 16 years that will have to be paid for if you make it to be a centenarian.
The other scary aspect of living to such an age is of course health problems and being able to afford the cost of ongoing medical and/or dentistry etc.
If you are 30 years old today and you haven’t started saving adequately for your pension, then it may be wise for you to factor in the possibility of living past your 90th birthday, because for most of us apparently it’s a very real likelihood.
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