People are on average living for longer than ever before. Life expectancy in the US, Aegon’s largest market, for example, jumped from just 47 years in 1900 to 79 years in 2019, according to Harvard Medical School.
This progress came to a halt, however, the following year, when the COVID-19 pandemic, as well as other factors, such as the opioid crisis, meant life US expectancy actually fell slightly in both 2020 and 2021. This pattern of decline was repeated in several countries around the world impacted by the pandemic.
The good news is that, according to recent figures from the Centers for Disease Control and Prevention, while remaining below pre-pandemic levels, US life expectancy is on its way back up. Longevity is also increasing in some of Aegon’s other markets, including the UK, China, and Spain, with Spaniards enjoying one of the highest average life expectancies in the world at 84 years.
Longer life, but fewer funds for women
Just as life expectancy changes from place to place, it is also differs between the sexes. Women in OECD countries can, for example, expect to live, on average, for around five years longer than men. It is, therefore, concerning that various studies have shown that women can often expect to receive less in retirement than men, despite having to fund a longer lifetime. A study by trade body, Insurance Europe, for example, found that in Europe almost half (44%) of the women surveyed were not saving anything for their retirement, compared with 34% of men. This trend was mirrored in the US, where a study by nonprofit, the Transamerica Institute and its Transamerica Centre for Retirement Studies (TCRS), found that 38% of the women surveyed rely or expect to rely on Social Security as their primary source of retirement income, compared with 26% of men.
“Women are at greater risk than men of not achieving a secure retirement. For women, the persistency of the gender pay gap, limited access to employer benefits, and time out of the workforce for parenting and caregiving often translates to lower retirement savings and fewer government benefits,” said Catherine Collinson, president of the Transamerica Institute and its TCRS.
Industry action
The pensions gap - and the gender pension gap - are important topics for Aegon. A longer life is, of course, a precious gift, and, at Aegon, we are excited about the possibilities increased longevity brings. We want to support as many people as possible in building strong financial foundations they need to live their best lives, also in retirement.
This is what drives colleagues like Kate Smith, Head of Public Affairs at Aegon’s UK business, who is a member of Pensions Equity Group (PEG), a coalition of over twenty leading pension companies and organizations which work together to address pension inequalities by engaging with government and other policymakers, and by sharing best practice with employers. Kate is also a key advocate for ensuring more women in the UK are able to qualify for auto-enrolment for workplace pensions.
“Significantly more women than men are excluded from pension auto-enrolment in the UK as they don’t earn enough to meet the £10,000 earnings threshold in a single job. Many low-earners, especially women have multiple jobs, each paying less than £10,000 a year threshold, so don’t benefit from an employer pension contribution as well as automatically saving in a pension themselves. We’re calling on the UK government to investigate a solution where multiple jobs can be combined virtually for the purpose of auto-enrolment,” she said.
In the US, the TCRS has conducted research annually for almost two decades on the reasons for and remedies to the gender pension gap, with the aim of helping to raise awareness about this important issue.
“Our research illuminates the challenges faced by women, highlights opportunities to improve their situation, and underscores the societal imperative to ensure their retirement security,” said Collinson.
“Everyone must play a role in improving women’s retirement security to allow them to retire with confidence. Policymakers can pave the way by addressing structural impediments, employers can enhance their business practices and benefit offerings to be more inclusive of women’s needs, providers can help through awareness raising initiatives, women can further engage in financial planning, and men can be greater advocates and allies,” she added.
So, while we should celebrate the fact that life expectancy is on the rise again in many places, a number of important issues still need to be addressed to help ensure that as many people as possible can prepare properly for their retirement.