The English live longer than the Scots, they have a much higher life expectancy. However, the Scots buy the same annuities as the English, which are calculated on the English life expectancy. This means that the Scots are getting a lower pension annuity income.
Some areas of Scotland have the lowest life expectancy rates in the UK. According to the recent tables compiled by actuaries Punter Southall, only one area of Scotland, East Dunbartonshire, has a longer life expectancy than their English counterparts.
The average life expectancy across the UK is 76.6 for men and 81 for women. The lowest life expectancy for both sexes was from Glasgow City where people live, on average, ten years less than the average.
Many annuity providers do not take this into account when calculating their annuity rates, so the Scottish are living on meagre English pensions.
Punter Southall say that they have developed a tool, the ‘bespoke longevity generator’ which reflects factors such as socio-economic groups, location and occupation to calculate their annuity figures according to more relevant mortality factors.
