In considering the national state pensions age, life expectancies for all socioeconomic groups are generally being greatly ‘understated' by as much as 10 years says the Pensions Policy Institute (PPI).
New research conducted by the PPI, as a form of response to the Pensions Commission’s first report, suggests the current lifespan of men working as manual workers is closer to 81 than the 71 predicted by the Office of National Statistics, while those in professional occupations live five years longer again.
Current figures released by the ONS calculate life expectancy from birth, based on death rates at each age throughout his or her life, and not 65, the PPI stresses.
The body argues calculating longevity on this basis includes those people who do not reach the age of 65, and is thereby calculated on a period basis making it difficult to use in debating the state pensions age (SPA).
Life expectancy at 65 is an estimate of the number of additional years they are expected to live, having already reached that age, and then reveals how long a pension would need to be paid if an SPA is kept at 65.
Under these terms, the ONS data provides life expectancy of those aged 65 as 78 years for men in manual labour, instead of 71 and 83 for professionals instead of 79.
Calculating life expectancies on a ‘period’ format does not allow for future mortality improvements, the PPI says, while on a 'cohort' basis - meaning the amount people have in common with others born in the same year - the individual’s life expectancy would be more accurately estimated using the mortality rates for a 65 year old in 2004, the PPI believes.
It adds because longevity is continuously on the rise for older people, life expectancies are longer for all social classes when calculated on a cohort basis.IFAonline
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