Alleviating Pensioner Poverty.
“Over recent years it has been established that the population of many industrialised
countries, including the UK, are living longer. By 2056 the number of people over
the age of 65 in the UK is expected to increase by 9% of the total population. Projections
from the UK Office of National Statistics, for example, show that the number of
people within the UK who are 65 years and older is projected to grow from 9.8m in
2007 to 12.1m by 2017. So the proportion of those in work versus those in retirement
will change drastically over the next few decades.”
Joseph Lu
Mortality Risk Actuary
Legal & General Protection & Annuities
What we know
Legal & General pays over £1bn a year in the form of an annuity pension
income each year, to over half a million customers who have put their trust in us
to provide them with an income for life.
Our customers typically have pension savings pots of between £25k to £30k
with which to buy their annuity.
Our monthly Money Moods survey has shown that in 2010 the recession is putting
severe pressure on the amount of pension savings people are able to make as disposable
income becomes increasingly scarce.
There are also additional pressures as a ‘stop start’ approach to working
means there isn’t always the opportunity to make regular pension savings,
which again reduces the size of the pension pots. And although people have to work
longer before retiring, with the state retirement age increased to age 66 for both
men and women by 2018, they are also living longer in their retirement. Nearly one
in five people currently in the UK will live to see their 100th birthday
according to figures from the DWP (Department of Work and Pensions) and so need
to ensure that their income in retirement is available throughout their life.
Looking forward
There is no doubt that a retiring population creates opportunities as well as risks
for a pension provider like Legal & General. Some of the key emerging questions
in this area for us is:
- When providing service to our customers what can we do better to support those that
are more ′vulnerable′? (Living by themselves, poor health, small/too
little income)
- Who will pay for long-term care? Can it be insured against or saved for?
- Can we improve accessibility to our products for the elderly?
- How PC literate are our customers?
- The relative importance to people of the transfer of inter-generational wealth,
either at death or before
- How can we continue to help established pension funds to do their job as people
live longer and liabilities increase?
Case studies