We’ve become used to hearing about how much longer we’re all going to live, particularly from the Government as it explains why we must wait even longer for our old-age pension.
From the moment we’re born, there’s simply less chance that we’ll die nowadays from things that used to kill people all the time, be it death in childbirth, road accidents or preventable disease in old age. As we improve our health, diet and safety, our life expectancy grows.
But it is not growing as fast as it used to. New analysis from the Office for National Statistics this week provides further evidence of the slowdown in life expectancy improvement since 2011. In the six years before then, UK life expectancy at birth grew by 17.3 weeks but the growth in the six years since then has been just 4.2 weeks. This makes the flattening of life expectancy more severe in the UK than in any other country bar the US.
Ascribing reasons for this is difficult and the ONS makes a point of not doing so. It would say only that the drop-off is partly due to the UK experiencing a relatively large increase in male life expectancy from 2001 to 2011.
Some have ventured that austerity in public services has played a role while others blame recent, more virulent strains of flu to which older people are particularly vulnerable.
What seems unlikely is that, despite the recent trend, gains in life expectancy are coming to a permanent end, as though we’ve hit some sort of life expectancy ceiling. Yes, the slowdown seen in the UK numbers is replicated in other countries - of the 20 developed countries analysed, the ONS found the same trend in 12 - but there are notable exceptions.
Japan, Norway, Finland and Denmark are among those countries where life expectancy is now accelerating. In Japan, which is often described as a demographic front-runner and where life expectancy at birth is second only to Switzerland, it is now growing faster than anywhere else.
This suggests that countries like Britain could soon see their life expectancy begin to accelerate once more.
All this has implications for public policy, in both the short and long term. The ONS data identifies deaths of British men over 80 years of age as having contributed most to the slowdown in life expectancy. Their mortality rate improved by around 21% from 2001 to 2011, but has since ground to a halt rising just 2% since then. It’s important to understand why.
In the longer term, despite recent wrinkles in the data, government must make public safety nets sustainable as we live to older ages. This includes the State Pension and the system for social care that is increasingly strained.
For individuals, too, there are considerations. A rise of a few weeks in average life expectancies may not seem like much to worry about, but underneath that broad statistic are much sharper increases affecting individuals.
For example, Fidelity’s own research, conducted last year with the Oxford Institute of Population Ageing, showed that those people who are 45 now and go on to reach 65, will have an average life expectancy almost three years longer than today’s 65-year-olds. That’s three years longer in retirement to plan and to pay for.
Saving more during working life, making the most of the tax-efficient savings system, grabbing any employer help that’s on offer and taking smart risks with investments will all help you to do this. Most important of all is to start the whole process as early as possible, even when the amounts you can save seem paltry, so as to give returns the longest possible time to compound.
Progress is being made, and the auto-enrolment of workers into pensions is an example of far-sighted public policy that took many years to build consensus for, but which is now bearing fruit. In 2012 when the program started to be rolled-out, the proportion of people saving into a private pension was 55%. By 2017 this had risen to 78%, according to the Pensions Regulator.
Comparable reforms for the social care system will be just as hard to develop, but are no less necessary.
The value of investments and the income from them can go down as well as up, so you may get back less than you invest. Tax treatment depends on individual circumstances and all tax rules may change in the future. Withdrawals from a pension product will not be possible until you reach age 55. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.
Combining your pensions into a Self-Invested Personal Pension (SIPP) can make it easier to manage your savings - and it could be cheaper, with lower fees than you’re currently paying.