David Bogle lays out an 'easy guide to longevity risk'

Public awareness of retirement planning is higher than ever before thanks to the new pension freedoms, and the introduction of auto enrolment.

But, there is danger of a false sense of security that simply having a pension will ensure that members will be fully equipped financially for the whole of their retirement.

People are living longer and need to take into account that this means that their pension has to last longer too.

While longevity risk is understood by pension experts, it has not really been understood by most people outside of the industry, so Spence?has put together an easy guide for members to reference when thinking about funding their pension, to ensure it supports their whole retirement:

Sustainability:Any system adopted must be sustainable enough to last you, for your whole life. If you are saving via a workplace pension, the due diligence will have been done for you on your behalf by your employer.? If you are saving via a pension you have selected yourself, consider seeking advice to ensure that you have or are making the right choice.

Adequacy:The benefits in retirement must be adequate to maintain your standard of life. This will mean different things to different people, and what will be adequate for you, may not be adequate for someone else. Think about your plans for retirement and the lifestyle you will live. Will you travel more? Do you plan to settle in the country where houses and rent are cheaper? Will you live roughly as you are now, or are you planning to wind down? How much will you need to maintain your chosen lifestyle? – You may be surprised at the answer.

Information:Make the most of all information available to you to help make more informed decisions. There are many options to get you started before you even get to the point of having to pay for advice, for example: Pension wise;The Pensions Regulator; or the PLSA.

If you have a workplace pension, ask your employer or your pension provider.

There are also a number of free mobile phone apps out there that can estimate your life expectancy to help in your planning; however, please use these with caution as they can provide differing results.

In any case, these can only provide you with an "average" life expectancy – in reality you might live for another decade or more.

Flexibility:How much you need in retirement income will depend on your individual circumstances and the lifestyle you aspire to lead once you finish work. Ensure that your benefits reflect this and be flexible if your circumstances change. For example, do you intend to work for a short time after retirement by taking on small jobs? If so, you perhaps won't need as much income from your retirement fund in the early years after retirement, and your retirement planning should be reflected accordingly.

Equitable:The Government must ensure that the framework that is being used for your retirement provision is equitable and fair (especially with regards to tax relief). This can be quite difficult to define, and it will be up to the individual to determine how they will be affected by what a Government determines to be fair or equitable. What may be fair and beneficial for the population as a whole may not be the same for an individual. The individual must not lose sight of the other concepts described above.

In this new era of additional choice in retirement, members need all the help they can get.

Especially since ABI recently confirmed that over 55s have cashed-in over GBP 5bn of their pension pots since the pension freedoms were introduced.

That is a lot of money, and possibly represents a significant decrease in future pension payments. It is clear that a significant degree of financial management needs to be promoted to ensure those over 55s are making the most informed decisions possible.

Written by David Bogle, Mortality Expert, Spence & Partners