Ever since the state pension was introduced in 1948, the life expectancy for men and women has consistently risen. It was originally envisaged that men retiring at 65 could expect to live for three score years and ten. In 2008, this 70 year age target had increased to 84 for a male.
Rising life expectancy has been a main reason why direct benefit pension schemes have been steadily withdrawn. For the same cause, the state pension age has recently been increased, most sharply for women. As a result, pension provision is proving for most people totally inadequate for meeting their retirement needs over a period which is very probably likely to extend for over 20 years.
It comes as something of a shock therefore that, in their most recent projection, the Office of National Statistics (“ONS”) indicates that there has been a reduction on our life expectancy of approximately one year. Perhaps because of their own surprise at the new prediction, the ONS are not yet suggesting that the long term trend has been definitely reversed.
The life expectancy statistics are important because they are fundamental to the determination of annuity rates, and also for the loan to values applicable to equity release plans. As a consequence, those at or in retirement should find that they can raise more money if the life expectancy reduction proves to be more than a blip.
If you are a homeowner and would like to know how much can be released on an equity release plan, it is best to contact a specialist independent financial adviser like Bower who have access to all the reputable lifetime mortgages and home reversion plans which are available. The loan to value calculation varies significantly between the different Equity Release Providers, particularly in cases where poor health and/or adverse lifestyle conditions apply.
A similar situation is applicable to annuities where under the open market option, it is best to approach a broker like Bower Pension Services to make sure that the amount receivable is maximised.
