The average age at which people leave the labour market – a proxy for average age of retirement – rose from 63.8 years to 64.6 years for men and from 61.2 years to 62.3 years for women between 2004 and 2010.
For men, the peak ages for leaving the labour market are 64 to 66 years. For women, the peak ages are 59 to 62 years. Thus, retirement peaks around State Pension Age (SPA) for both sexes; but many people retire before SPA, and others work beyond SPA.
In 2010, there were 3.2 people of working age supporting each person of SPA and over in the UK. Without any changes to SPA, this ‘old age support ratio’ would drop to 2.0 by 2051 but under current legislation SPA has already begun to increase for women and SPA for both sexes will rise to 68 by 2046. When these SPA changes are taken into account, the old age support ratio is projected to fall less, to 2.9 by 2051.
Women’s life expectancy at SPA will decline over this decade as their SPA rises. Between 2021 and 2051 life expectancy at SPA is expected to rise gradually for both sexes, because, following a change in the assumptions for future life expectancy in ONS's 2010-based population projections, life expectancy at the relevant ages is now projected to increase at a slightly faster rate than the increases in SPA contained in the Pensions Acts 2007 and 2011.
There are inequalities in life expectancy between social classes. The latest estimates for England and Wales show a gap of over three years in life expectancy at age 65 between the highest and lowest classes in the National Statistics Socio-economic Classification (NS-SEC). Within the UK, life expectancy at age 65 is highest in England and lowest in Scotland.
A related question is whether people will be able to enjoy their retirement in good health. In 2008, the latest year for which figures are available, UK men at age 65 had 9.9 years of healthy life expectancy compared with 17.6 years of life expectancy, while UK women at age 65 had 11.5 years of healthy life expectancy compared with 20.2 years of life expectancy. These figures are for the average person and do not take account of differences in socio-economic class or location.
Author: Pensions WorldPensions World is the leading monthly magazine for pensions professionals published by LexisNexis.