Postcode divide in state pension set to grow to £67,000 by 2028

By 2028, a woman living in East Dorset – the area of the UK with the longest post-65 life expectancy for both men and women – can expect to live nine years longer than a woman in Corby (the area with the shortest life expectancy) when they retire, according to TUC research. This state pension divide works out at £67,000 over their lifetime. The state pension divide for men living in East Dorset and Manchester, the area with the shortest male post-65 life expectancy, will be £53,000.

The report looks at life expectancy projections by gender, occupation and geographical area, and their effect on the amount of state pension people are set to receive. The state pension age is due to rise to 66 between 2018 and 2020 and to 67 between 2026 and 2028.

This state pension divide will also grow for different types of workers. A female managerial or professional worker retiring in 2028 can expect to live 3.8 years longer than a female manual worker, compared to 2.4 years today. This state pension divide works out at £29,000. The equivalent gap for male manual and professional workers is £23,000, or 3.1 years.

The TUC report also shows that millions of people will receive less state pension, despite having to work for a further two years, because their life expectancy is not keeping pace with the increasing state pension age.

People living in poor areas such as Corby, Manchester, Salford and Hull will receive substantially less state pension over their lifetime. A woman in her late 40s in Corby will have to work for two more years before retiring but will receive £12,000 less state pension during her retirement than those retiring in 2016. A man of a similar age living in Manchester will receive £7,500 less during his retirement.

The lifetime state pension for men, based on a full ‘single-tier’ state pension award, will fall from £147,000 in 2016 (when the single-tier is introduced) to £146,000 in 2028. Women retiring in 2028 will have to work longer in order to receive the same state pension (£164,000) as those retiring in 2016.

The government’s failure to consider persistent inequalities in life expectancy when accelerating the rise in the state pension age, will leave millions far worse off in retirement, says the TUC. They believe that the government should reverse its decision to raise the state pension age in light of new evidence on life expectancy projections, and instead set up an independent commission to examine inequalities in life expectancy and their effect on people’s retirement incomes.

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