How Where You Live Affects Your Pension

How does your personal demographic profile affect your UK retirement?

You’ve paid into the UK State Pension fund all of your working years. Now you’re 65 and want to retire and take life a bit easier. Is this possible? There are a number of factors affecting your retirement that you may not have considered. These include ever-changing pension payments and age eligibility; your life expectancy; and where you live, among other individual factors. 

Current Pension amounts 

The present 2022 – 2023 full UK State Pension amount is £185.15 per week, or £802.33 per month, for a maximum of £9,628 per year. You must have contributed to the fund for 35 years to get this full amount. Without 35 years of contributions, the basic State Pension maximum is £141.85 per week. 

Pension Ages 

The current State Pension age is 66. Between 2026 and 2028, there is a plan to raise the retirement age to 67. Between 2037 and 2039, the State Pension age is scheduled to increase further, to 68.  

The State Pension age is going to be kept ‘under review’ meaning that the plans could change again in the future, depending on different factors, such as changes in life expectancy. 

Life expectancy 

All retirement plans consider your current age compared to a life expectancy age to estimate how much money you’ll need or want until you die. But, no one knows the date of their death, so historical data is used, along with your personal and family health history, to find an ‘expiration date’ to use in calculations. 

Life expectancy numbers have risen dramatically over the years. This is attributed to improvements in medicine, nutrition, hygiene, housing, sanitation, control of infectious diseases and other public health measures.  

In 1841, life expectancy was 40.2 years for males and 42.3 years for females, with infant and childhood mortality being the largest contributing factor to the low numbers. 

By 1920, the numbers rose to 56 for males and 59 for females. By 2019, life expectancy at birth in England had increased to 79.9 years for males and 83.6 years for females. 

Today, boys born in the UK in 2022 have a life expectancy of 87.3 years; female life expectancy is 90.2 years.  

Infectious diseases have affected our life expectancy more than once. In the mid-1300s, the Plague cut life expectancy from 43 to 24 years. Once it ran its course, the age went back up and rose to 48 years. 

In 2020, the Covid-19 pandemic caused life expectancy to fall by 1.3 years to 78.6 years for males and by 1 year to 82.6 years for females, the level of a decade earlier. 

Aside from infectious diseases, Europe experienced a gradual decrease in life expectancy between from 2011 to 2019. While this was true in many European countries, it was greatest in the UK. There are several theories about why this happened. One of them finds associations between National Health Service data, mortality trends, and the effect of the government’s post-2008 ‘austerity’ measures, which cut public health spending. 

Healthy Life Expectancy 

The term ‘healthy life expectancy’ is an estimate of the number of years lived in ‘very good’ or ’good’ general health. Healthy life expectancy has also increased over time, but not as much as life expectancy, so the added years are generally spent in poor health.  

Although a male in England could expect to live 79.4 years in 2018–20, his average healthy life expectancy was only 63.1 years. He would have spent 16.3 years – 20% – in ‘not good’ health. Females in this time period had a life expectancy 3.7 years longer, but most or all of that time was spent in poor health.  

So, while State Pension ages use the rising average life expectancy of individuals to raise the retirement age, they do not consider the health – and presumably, the ability to physically be able to continue to work – factors. 

Inequalities in life expectancy 

In addition to overall population averages, your personal life expectancy is affected by many individual behavioral factors. These can include smoking, a poor diet, and access to and use of health care. 

Socio-economic factors also affect longevity: income; education; housing and employment; and specific characteristics such as sex, ethnicity, disability and social exclusion. 

Interestingly, geography in the UK reflects these factors, where people in the south of England live longer on average and with more years in good health than those living further north. And, the gap between the two has widened over the last decade.  

This is considered a factor of the overall ‘level of deprivation’ of an area. The UK indices of deprivation include: income; employment; education; skills and training; health and disability; crime; barriers to housing services; and living environment. 

For example, in 2018 – 2020, in the northern cities of Blackpool, Middlesbrough, Manchester and Liverpool, life expectancy for males and females was almost nine and eight years lower, respectively, than in the southern cities of Westminster, Camden, and Kensington and Chelsea.  

Disparity of total pension benefits  

The north-south disparity affecting longevity plays out as a substantial difference in total benefits received by pensioners. For example, based on local life expectancies, a 66-year-old in the wealthiest areas of the country such as the South West, South East or London can expect to receive £210,275 over the course of their retirement, according to Evelyn Partners. This contrasts with the total amount received in Scotland, just £158,493, a difference of more than £50,000. 

“It’s clumsy to use national life expectancy to determine state pension age when there are such wide regional differences, said Sally West of the charity Age UK. “It is a blunt tool. It is true that it would be very hard to adjust for regional life expectancies, but more needs to be done to address our national health inequalities. There is already so much uncertainty for people in their 50s and 60s about the State Pension and this adds to their fears.” 

Disparity of cost of living 

The life expectancy inequity of living in the UK’s northern regions may be somewhat assuaged by the higher cost of living in the south. For example, consumer prices in Manchester are 13.42% lower than in London, without rent. With rent factored in, prices are just under 30% lower than in London. 

If you paid rent in both cities, you would need around £5,062 in London to maintain the same living standard as in Edinburgh, with £3,400. So, while a Londoner may live longer and ultimately collect more in State Pensions, it probably won’t cover as much of their incurred expenses. 

Is it better somewhere else? 

For those thinking of retiring abroad, consider these statistics: the cost of living in the UK is more expensive than in 79% of the countries in Western Europe and in 82% of countries in the world.  

The cost of living in your home abroad may or may not allow your money to go further than in the UK. Check this city-to-city cost-of-living calculator to get an idea of how far your UK pension check will go. 

UK pensioners are allowed to get State Pension while living in another country. However, the country you move to will determine if you receive the cost-of-living increases to the State Pension amount, or if your benefit stays the same as when you moved. 

Final thoughts 

So, your retirement depends on a multitude of factors, both in and out of your control. Individually, you can address the amount you pay to the State, and your personal health and well-being. As a citizen of the UK, however; you’re affected by age eligibility, cost-of-living increases, and benefit amounts as determined by the government, based on life expectancy, which could accurately reflect where you live, or not. 

Add to this the cost-of-living expenses of your location, which you can’t entirely control. Once all the calculations are done, you’re back to acknowledging that the State Pension of (currently) £185.15 per week is really only part of all the money you’ll need. 

The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up-to-date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation. 



Susan Austin

Susan Austin is a freelance writer living in Prague, Czech Republic. Originally from the U.S., she has written and worked in many industries, including healthcare, transportation, travel and leisure, museums, education, and archaeology.

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