The effect on pensions of increasing life expectancy

Abstract

The average age at which people die has increased dramatically during the 20th century and looks likely to go on rising for the foreseeable future. As a result of this, the cost of providing a given level of pension benefit has gone up significantly, and no one really knows how far and how quickly life expectancy will continue to improve. Consequently, there are severe doubts about whether or not employers who have offered their employees pension schemes in the past will be able to afford to provide a similar level of benefits in the future. Something is likely to have to `give' to compensate, and the most logical approach would seem to be to reverse the recent trend to early retirement and increase the average age at which people stop work and take their pension benefits. A recent European Union Directive may help bring about the necessary change in attitudes to the employment of older people.