More money, longer life
A recent life-expectancy study of retirees receiving superannuation pensions from large public-sector super funds suggests that higher retirement incomes can mean greater life expectancy.
The core argument why people should try to maximise their retirement savings is, of course, that this will improve their standard of living in retirement. But a perhaps overlooked part of the case for saving more is the life-expectancy factor.
“Mortality for these [public-sector superannuation] pensioners is less than the projected general population mortality,” reports the Mercer study, which covers from 2005-2009.
“Mortality rates for retired public-sector pensioners immediately following retirement are significantly lower than for the general population,” the study adds. “Male [mortality] rates are about half of the general population.” Female rates were about 60% among recent retirees.
And the study’s conclusion is fundamentally that retirees with high super pensions will “generally live longer”.
For the record, the Mercer study gives the life-expectancy for a 65-year-old receiving a public-sector pension as 86.9 years for men and 89.4 years for women. These projections are on the basis that assumed continuing improvements in life expectancy will eventuate.
A facet regarding public-sector pensions that cannot be ignored – particularly in regard to current retirees – is that the public service had gained superannuation coverage a long time before the general population.
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Robin Bowerman, Vanguard Investments Australia's Head of Retail, has more than two decades of experience in the finance industry as a writer, commentator and editor.