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The Office for National Statistics has updated its life expectancy calculations. The trend for 65 year olds is continuing downwards.


New life expectancy figures released MFP Wealth Management

 

In early December the Office for National Statistics (ONS) released updated life expectancy projections based on the assumptions for future mortality from the 2018-based national population projections (NPP), which were published on 21 October 2019.

The impact of the latest ONS number crunching is well demonstrated in the graph above, which compares the latest (2018) projections for life expectancy at age 65 with those from 2016 and 2014. While life expectancy is still expected to rise in the future, the absolute numbers are now smaller. The ONS says that “The lower projections of life expectancy over time reflect the higher mortality rates observed in recent years than were previously projected and the projected lower rates of mortality improvement at older ages”. That explains why, for example, the 2014 projection said that a male reaching 65 in 2018 would have a life expectancy of 21.8 years, while the 2018 projection is 19.9 years. The drop for women is the same – from 23.9 years to 22.0 years.

Below are the latest expectations and related probabilities. Note that a corollary of the heavier mortality assumption is that the odds of living to 100 reduce markedly. For example, for a 65 year old male they are now just 2.8% whereas the 2014 figure was 8.1%.

  Age 60 Age 65 Age 70
Male Female Male Female Male Female
Life Expectancy 84 87 85 87 86 88
1 in 4 chance 92 94 92 94 92 93
1 in 10 chance 96 98 96 98 96 97
Odds on reaching 100 3.2% 5.3% 2.8% 4.8% 2.5% 4.3%

Falls in projected life expectancy have been commonplace in the UK over recent years. This latest set of data calls into question whether the planned increase in State Pension Age (SPA) from 67 to 68 between 2037 and 2039 will survive the next SPA review.

Source Technical Connection.

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