I’m going to resist the temptation to write about Northern Rock, given the blanket coverage elsewhere. Suffice it say that Alistair Darling has a Northern Rock mortgage on a London property, (http://www.telegraph.co.uk/money) so presumably he’ll have the interests of the bank’s customers at heart, if not those of shareholders.

Instead, I am wondering how we are going to cope with increasing longevity, given the implications this will have on annuity rates and our ability to fund our pensions.

The Pensions Regulator, who oversees UK final salary schemes, issued a timely wake-up call this week about the need for actuaries to factor in lengthening life spans into scheme funding arrangements. Apparently, scheme actuaries have been underestimating how long scheme members are likely to live and need to increase longevity assumptions by 18 months.

This means assuming a 65 year old man today will live to age 89, and a 65 year old woman to age 92 - roughly two years longer than the current presumptions in more than half of UK company schemes.This might seem like great news for pensioners until you realize that every additional year of life expectancy increases scheme liabilities by 3-4 per cent.

Even though members of final salary schemes tend to live longer than those who don’t benefit from this luxury, longevity is rising across the board and will have a knock-on effect on annuity rates for the majority of people who will have to buy an annuity when they retire.  

And if you believe American pensions expert, Aubrey de Grys, who claims that there are people alive today who will live to 1,000, a lot of people are going to outlive their assets.

This is not as fantastical as it might at first appear. A quick search on the Defaqto annuity calculator http://www.find.co.uk/pensions/annuities_centre/annuities-calculator) shows that the best deal for a 65 year old man buying an annuity today (increasing by 3 per cent a year), with a £100,000 fund, is just £5,417 pa – and that’s excluding any partner’s pension or guarantees.

So the outlook for those of us who will be at the mercy of annuity rates when we retire is grim. We will either have to accumulate enormous savings to sustain us through our increasingly long retirements, or step up the intake of the deep-fried Mars bars and hope for an early demise.