Budget changes and ONS data offer ‘wake up call’

Speaking after the ONS revealed increasing longevity across the UK in its 24-page Statistical Bulletin, Mr Chinn said: “This reinforces the need to plan effectively for retirement incomes.

“Lots of pensioners in their 70s and 80s are falling on hard times, so it is important that people start to think about living longer and making savings last.”

However, he said the ONS data was “only one part” of how insurers underwrite products. He said some postcode-based annuities take a “very broad brush approach” that could hinder people in areas with low life expectancies, adding: “It’s important to also look at health, lifestyle and family history.”

Darren Philp, head of policy for auto-enrolment provider The People’s Pension, said: “It’s good news that people are living longer, but for many it means retiring later or contributing more to a pension.

“The single-tier pension and auto-enrolment are a foundation for retirement, but people also need to contribute more to their savings. Yet the 8 per cent contributions are not enough through auto-enrolment, as people should be aiming for between 12 and 15 per cent.

“It’s also not just about saving: people need to save more at an earlier stage of life.”

Malcolm McLean, senior consultant for independent actuary and pension consultant Barnett Waddingham, said: “I’m not surprised that life expectancy is rising, and the message is that we need to save more, as many of us underestimate how long we will live.

“I would also suggest that the retirement age is no longer relevant as people continue working past this age.”

Mr McLean said there was great value in the security that an annuity could give, but that at the moment, annuity rates were “appalling” and it was incumbent on the industry to think whether it can create an alternative product to an annuity which gives a lifetime guarantee.

He added: “The ONS data and the regional variations in life expectancy, also raises questions about continuing with a standard retirement age across the UK.”

Graeme Mitchell, managing director of Scottish Borders-based advisory firm Lowland Financial, said: “The main lesson to be learned from this data is that we should all move to Glasgow and buy an annuity. On a serious note though, the Budget has opened things up and made pensions more attractive, the key is to save more, think about working for longer and planning for retirement.”