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Date posted: Wednesday, July 29, 2015


Synopsis: The Office for National Statistics has a useful tool to offer an answer to the question ” How long will my pension need to last?”

One of the points which regularly emerges in surveys is that Joe Public underestimates their life expectancy. This obviously could have serious consequences with so much more emphasis now being placed on drawdown as a retirement income option. However, even when somebody knows the average life expectancy for their age, that does not tell the whole story. The point about averages are that almost by definition, half of us are above average and half below. In the case of life expectancy, being in the upper half could mean many more years of life/drawdown.

A useful graphical representation of the point is now available on an ONS website, which allows you to enter an age and sex and then provides

·        Average life expectancy;

·        The age there is a 1 in 4 chance of reaching;

·        The age there is a 1 in 10 chance of reaching;

·        The odds on reaching 100; and

·        A graph showing the chances of reaching any given age.

The graph is a useful reminder that most of us will reach age 75, at which point lump sum pension death benefits become taxable.

The ONS calculations are derived from their 2012-based population projections and thus use a heavier rate of mortality than is likely to apply to most users of private pension provision. As a flavour, here are some numbers from the system. The age 75 figure is an approximate number, estimated from the graph.


Age 60 Age 65 Age 70
Male Female Male Female Male Female
Life Expectancy 86 89 87 89 87 90
1 in 4 chance 95 97 94 97 94 96
1 in 10 chance 100 102 99 102 99 101
Odds on reaching 100 10.9% 15.7% 8.8% 14.4% 8.0% 13.3%
Odds on reaching 75 84% 87% 82% 87% 88% 90%


It is worth having a look at the graph and the long tail that exists beyond average life expectancy. That shape helps explain the post-age 85 drawdown structure proposed by Nest.

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