From Mr Werner van Wyk.
Sir, David Stevenson (“Stock market has nothing on pension crisis”, FT.com, August 26) writes on the increasing pension costs resulting from a population suffering from improving longevity.
He estimates the cost of retirement at 65, assuming a 17-year remaining life expectancy, to be £386,400. He states that an increase of six years to life expectancy increases this cost to £507,035. If we consider retirement age to be fixed, this is indeed the case. However, is it not reasonable to assume that improvements in life expectancy should be accompanied by improvements in our ability to work? If we amend Mr Stevenson’s example and increase the retirement age by six years, improvement in longevity serves as a reduction in cost rather than a financial burden.
Using Mr Stevenson’s assumptions, the lump sum required to purchase a 17-year pension at age 65 reduces from £386,400 to £364,600, assuming retirement at age 65 and 71 respectively. I dare say the crisis facing pensions is not longevity but laziness.
Werner van Wyk, Johannesburg, South Africa
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