The change, which has produced another upward tweak in the government’s life expectancy estimates, is good news for workers but not very welcome for pension programs where more money will be needed to plug any funding holes, the Financial Times reported.
Even though the government retreated from a previous goal of phasing in a public worker pension age of 60 to 65 years old, the government’s move adds another four months, or 2%, to the life expectancy of a 65 year old man, taking it from 19 to 19.4 years, and about one month to the expectancy of a 65 year old woman.
But it means that, in just two years, the official estimates of life expectancy for 65 year olds have jumped from 17.8 years to 19.4 years for men, and from 20.6 years to 22.1 years for women.
The effect will be greater in the future. By 2051, the government actuary projects that 65 year olds will on average live about three years longer than the projections being made just two years ago.
Adair Turner, chairman of the Pensions Commission, who backed the adjustments, said the new figures underlined its message that people are either going to have to work longer, save more, or pay higher taxes to fund their lifestyles in old age.