New study could help firms providing final salary pension schemes
A Somerset village has topped a life expectancy league table put together by actuaries at professional services firm Towers Watson.
The study shows that a male retiree in Hinton St George can expect to live to 88.7 years of age, while a female can expect to live to 91.6.
The village narrowly edged out Aldeburgh in Suffolk, Frinton-on-Sea in Essex, Seaview on the Isle of Wight and Ferndown in Dorset, which made up the top five locations in the table.
All but one of the top 15 UK postal towns in the table are in the south of England.
The study of mortality rates among those receiving occupational pensions also found that retirees in Bootle in Merseyside have the lowest life expectancy in the country, at 84.9 years for men and 89 years for women.
Besides Bootle, the towns with the lowest life expectancy are all in either Northern Ireland or Scotland.
Matthew Fletcher, a senior consultant at Towers Watson, said: “Where people live can be a powerful predictor of how long they will live. Of course, this does not mean that a man could extend his life by four years simply by moving from Merseyside to Somerset.
“Instead, a pensioner’s address provides clues to other things linked to life expectancy, like their lifestyle and how much money they have from sources besides their pension.”
He added that companies providing final salary pension schemes can use individuals’ postcodes to calculate how much money they should put aside to fund pension commitments or how much they should be prepared to pay an insurer to take on this responsibility.
Towers Watson studied the recent mortality experience of 51 benefit pension schemes which have 1.5 million retired members between them. It examined how the chance of dying at each age varies between clusters of postcodes from across the country whose residents have been assessed to have similar characteristics.
The analysis shows that life expectancy can differ by two or three years when comparing areas within towns.
Towers Watson said that models using gender, pension amount and postcode have been used for a number of years to estimate life expectancy, but its new study goes further in considering whether there is any residual effect which can be explained by the industry sector of the pension scheme after taking account of other factors.
Fletcher said: “If we compare two neighbours with equal pension income, we would expect a former employee from the finance, retail or technology sector to live, on average, for nine months longer in retirement than his neighbour who was employed by a business in the basic materials sector.
“This difference is relatively small because much of the impact traditionally associated with industry sector falls away once pension size and postcode have been allowed for.”