State Pension: why some retirees get £50,000 more

A stark difference in life expectancy can mean you enjoy thousands more in payments from the state.

When it comes to universal benefits, like the State Pension, the idea is that everyone receives the same, regardless of their status or financial position.

So long as you have the required years of National Insurance contributions, you are entitled to the same amount each week.

However, in practice you could end up receiving far more than others from the State Pension, depending on where you live.

How much the State Pension will pay in 2023/24

How long will you live?

It all comes down to life expectancy. The average life expectancy can vary sharply between different regions of the UK.

And as a result, while the weekly payment you’ll get from the State Pension won’t be any different based on where you live, it stands to reason that the longer you live, the more money you’ll end up getting through the State Pension.

This difference can work out at thousands of pounds too.

Analysis of data from the Office for National Statistics (ONS) by the advisory business Evelyn Partners broke down those regional differences, using the average life expectancy to calculate what typical residents of those regions will get from the State Pension.

Here’s how that breaks down:

To go back to that ONS data, the average life expectancy for men in London is a little over 80, while in Scotland it drops down to 76.8.

It’s worth remembering that when you dig down into individual towns rather than such broad regions, the differences can be even more significant.

For example, the analysis pinpointed Kensington and Chelsea in West London, where the average life expectancy for men stands at 88 and for women at 90.

That translates into an expected State Pension income of £315,945 and £355,410 respectively.

There is no easy answer to this situation.

The thought of having a region-based approach to the State Pension would be an administrative nightmare, but equally, it is worth asking whether there is a better way than setting State Pension policy off the back of a national life expectancy when there are such big regional differences.

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Relying on the State Pension

It’s important to remember that while there are evidently going to be big differences in how much you will likely receive based on where you live, even for those in areas with a long life expectancy the State Pension will be far from generous.

We’ve written before about how poorly the State Pension performs against comparable schemes in other countries ‒ you certainly aren’t going to have a retirement filled with luxury if you are relying entirely on the State Pension to fund your lifestyle.

What’s more, the State Pension is unlikely to become substantially more generous in the years ahead, given the questions over the triple lock and how sustainable it is. 

That makes it all the more important to prepare independently, save into a private pension and build your own nest egg.

We simply have no idea how generous a State Pension is likely to be once we reach retirement, so it’s crucial to have some retirement plan of your own.

A private pension makes sense for most of us, given the workplace pension scheme which means that your pension contributions are topped up by both your employer and the Government, in the form of tax relief.

It’s essentially free money from your boss, with the small catch that you can’t access that money until you give up work.

It also means that if the State Pension becomes less attractive, then you still have money to rely on.

What’s more, if you haven’t used the pension funds you’ve saved to purchase an annuity then the money will be passed onto your loved ones, irrespective of when you pass away.

None of us knows when we are going to go. But there are steps you can take now which means that our finances are able to support us throughout our life, no matter how long that may be.

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