I Will Survive (but will your pension?)
by Doug Brodie
/1. I Will Survive - the longevity problem nobody told you about
Gloria Gaynor, October 1978. Half a minute of that opening bassline and you’re fifteen again, pretending you weren’t watching Top of the Pops. The song’s protagonist was surviving a disappointing chap. Ours is surviving something rather more fundamental: the decade you don’t think you’re going to get.
The retirement industry has quietly been working to an assumption that your retirement lasts about twenty years. It does not.
Office for National Statistics cohort life expectancy for a 65-year-old in the UK gives us these rather sobering numbers:
A man aged 65 today has a median life expectancy of around 85. Nothing wrong with that.
But median means half of you live longer. The upper quartile for a 65-year-old man reaches 90.
For women at 65, the median is 87, and the upper quartile reaches 92.
For a couple both aged 65, there is roughly a 50% chance that at least one of you will see 90, and around a 1-in-10 chance that one of you reaches 95.
If you are reading this email on a Saturday morning with a cup of Nespresso in your hand, you are already in the “above average” longevity bucket. Educated, engaged, not smoking a Woodbine with your Sugar Puffs. Plan for 95. If you die at 82 having planned for 95, your children will send you a thank you note on the other side. If you live to 95 having planned for 82, the conversation gets awkward.
The whole edifice of modern pension “advice” - the 4% rule, the glide path, the cashflow plan to age 90 - was largely imported from America and assumes you’re going to conveniently expire on schedule. Hah! Fat chance.
/2. Sequence risk: the quiet assassin of pension pots (with the maths)
If you’ve ever read a pension brochure, you’ve seen the line: “Based on an assumed average return of 5% per annum…”
The word “average” is doing an enormous amount of heavy lifting in that sentence. And it’s lying to you.
Let me show you what I mean. Take two pensioners, Ringo and Paul, both aged 65, both retiring on 1 January with a £500,000 SIPP, both drawing £25,000 per year (indexed at 2.5%), both invested in the same portfolio that returns, on average, 6% per year over thirty years.
Same start, same withdrawals, same “average” return. The only difference is the order in which those returns arrive.
Ringo gets three bad years at the start: –15%, –8%, –5%, then steady 6%+ years thereafter.
Paul gets the opposite: steady 6%+ years at the start, the three bad years at the end.
Both average the same 6% over thirty years.
Ringo runs out of money in year 22. Paul dies at 95 with over £700,000 still on the ledger.
Same “average”. Wildly different outcomes.
This is sequence-of-returns risk, and it is a particular cruelty reserved for people who are drawing money out of a portfolio, not people paying into one. When you’re adding money, a falling market is a friend - you’re buying more units/shares cheaply. When you’re taking money out, a falling market forces you to sell more units/shares to generate the same pound of income. Those units can never grow back.
You can’t control the market.
You can’t control when you retire (well, within reason).
You can control whether the income you draw is a fixed pound amount from a volatile capital pot, or a stream of dividends from a diversified set of assets whose price goes up and down but whose dividend does not.
That second option is what we spend our days building.
/3. Annuity rates on 15 April 2026 - and what a difference a year makes
If sequence risk worries you, and frankly it should, there is one product that eliminates it entirely: an annuity. You hand a pension company a lump sum, they hand you an income for the rest of your life (and, optionally, your spouse’s). Whether you live to 75 or 105, the payments keep coming. The longevity problem is, quite literally, someone else’s problem.
We keep a running dataset of annuity quotes, all for a £100,000 pension pot, non-smoker, no medical conditions, monthly in arrears. Here are the indicative rates as at 15 April 2026, alongside the equivalent quotes from 17 March 2025:
Age 65, £100,000 purchase price
|
Quote shape |
15 Apr 2026 income |
17 Mar 2025 income |
12-mo change |
|
Single life, level, no guarantee |
£7,639 / yr (7.64%) |
£7,459 / yr (7.46%) |
+2.4% |
|
Single life, level, 5-yr guarantee |
£7,600 / yr (7.60%) |
£7,422 / yr (7.42%) |
+2.4% |
|
Single life, RPI-linked, no guarantee |
£5,198 / yr (5.20%) |
£4,926 / yr (4.93%) |
+5.5% |
|
Joint life 100%, level, no guarantee |
£6,772 / yr (6.77%) |
£6,591 / yr (6.59%) |
+2.7% |
|
Joint life 100%, RPI-linked, no guarantee |
£4,365 / yr (4.37%) |
£4,197 / yr (4.20%) |
+4.0% |
Age 60, £100,000 purchase price
|
Quote shape |
15 Apr 2026 income |
17 Mar 2025 income |
12-mo change |
|
Single life, level, no guarantee |
£6,962 / yr (6.96%) |
£6,672 / yr (6.67%) |
+4.3% |
|
Single life, RPI-linked, no guarantee |
£4,445 / yr (4.45%) |
£4,261 / yr (4.26%) |
+4.3% |
A few things worth staring at before you reach for the chequebook:
Rates have risen modestly since March 2025 - between roughly 2% and 5.5% across the range. But they did not rise in a straight line. The peak for most shapes was around June 2025 (the 65-year-old single-life level quote hit 7.69% then), followed by a softening through winter 2025/26 and a recent bounce. Timing, as ever, is not something mere mortals can get right.
The RPI-linked quotes have risen more than the level ones. That is not generosity from the insurers; it reflects a market that is pricing long-term inflation expectations somewhat more keenly than it was a year ago.
The gap between level (7.64%) and RPI-linked (5.20%) at age 65 is 2.44 percentage points. That is, in effect, what the insurance market is saying it expects average inflation to be over the next 20–25 years. Read that sentence twice.
A 7.64% level annuity looks like a ripe cherry. It isn’t. Eighteen years of 3% inflation cuts its real purchasing power nearly in half. The RPI-linked version starts at 5.20% and keeps up with the shopping basket. For most retirees planning past 85, the maths quietly favours the latter.
And - the unromantic truth - an annuity is irrevocable. You cannot change your mind. You cannot hand it back. You cannot leave it to the grandchildren. It is the purest possible form of “outsourcing the problem”, and that has a price which isn’t always visible on the quote sheet.
We don’t sell annuities (we’re not tied to any provider), but we model them against drawdown in every income plan we build. Sometimes the annuity wins. Sometimes it doesn’t. It depends entirely on your numbers, your health, your spouse, and whether sleeping at night has a price tag attached.
/4. The Dividend Heroes: trusts that have been paying through every crisis since your grandparents were courting
The Association of Investment Companies keeps a list called the Dividend Heroes - UK-listed investment trusts that have raised their dividend every single year for at least twenty consecutive years. It is a remarkable document. It includes, near the top:
City of London Investment Trust - approaching 60 consecutive years of rising dividends
Bankers Investment Trust - also approaching 60
Alliance Trust - approaching 60
Caledonia Investments - approaching 60
F&C Investment Trust - has paid a dividend every year since 1868. Disraeli was Prime Minister. The telephone hadn’t been invented.
Between them, these trusts have raised their dividends through:
Two World Wars
The Great Depression
The 1973 oil shock (which, admittedly, also gave us some cracking music)
Black Monday 1987
The dot-com crash
The Global Financial Crisis
Covid
Every prime minister since Gladstone
How? Revenue reserves. Unit trusts and OEICs must pay out what they receive. Investment trusts are companies; they can hold back up to 15% of their dividend income each year in a reserve, which they dip into in lean years to keep the payments to shareholders flowing. It is the single most boring and most important structural advantage in UK investing, and almost nobody outside the trade talks about it.
This is not a guarantee. Nothing is.
But a 58-year run through wars, strikes, hyperinflation and the 3-day week is, as the courts might say, evidence of habit.
And habit, when you’re 67 and trying to sleep at night, is worth a great deal.
/5. The conversation: what you haven’t told your spouse about the money
Here’s the empathy part. Every month, I have a conversation with a widow or widower - usually a widow, because actuaries are actuaries - and the opening line is some version of “I don’t really know where the money is, Doug. He did all that.”
It is one of the saddest and most avoidable conversations in our office.
The questions that need answering before one of you goes first are:
Where is the pension? Which provider? Which account? Which login?
Is there a joint-life annuity, or does the income die with the first spouse?
What happens to the SIPP on first death? (Hint: under current rules, it can pass tax-efficiently - but only if the paperwork says so.)
Who is the nominated beneficiary on each pension plan? Check this now. Many clients find the nomination form still names an ex-spouse from 1987.
Where is the will? Is the Lasting Power of Attorney (both types - property & finance, and health & welfare) in place?
None of this is romantic. Nor is it particularly enjoyable to discuss over a Sunday lunch. But neither is the alternative - which is your spouse, newly widowed, ringing round providers with a death certificate and a shoebox.
We run a process called the Income Discovery Meeting. Two hours, both of you, no jargon, no pitch. We map what you have, what it’s expected to produce, what happens on first death, what happens on second death, and what the surviving spouse actually needs to live on. Most couples leave the meeting having had a better conversation about money than they have had in the preceding thirty years. That is not a sales line. It is an observation.
You owe it to the person you love most.
You owe it to yourself.
You almost certainly don’t owe it to HMRC, but we’ll deal with them too.
So - will you survive?
Gloria did. Your pension should too. But “should” is carrying rather a lot of weight.
If any of the above has made you squint at your pension statement with a slight sense of unease, that is exactly the feeling that should prompt a phone call. Not because we’re going to panic you into anything - we don’t do that - but because the cost of a one-hour conversation with us is zero, and the cost of not having it can be measured in years of retirement income.
Have a chat with us, it’s good to talk.
020 7390 0670
We’ll bring the coffee. You bring the questions.
About the author
Doug is the Founder and CEO of Chancery Lane. He has worked with personal investing since 1989, specialising in income investing for the last fifteen years, firstly with Old Mutual and running his own award winning business since 1995. Doug is chartered with two professional institutes, CISI and CII and holds the Certified Financial Planner licence.