Chris Ball (Letters, 24 September) has blurred two quite distinct ways of talking about life expectancy. One way of calculating it is to look at the current death rates for each age group and then work out an expected age of death. This is called period life expectancy; the Office of National Statistics (ONS) estimate for this at age 65 in 2010 was 83 for men and 86 for women. These are the figures most commonly reported in the media and the kind quoted in Mr Ball's letter, but they make no allowance for future improvements in life expectancy.

Most organisations that use life expectancy calculations in their work (for example, insurance companies and pension fund trustees) do make an allowance for future improvements, since the evidence is that there have been significant increases in life expectancy at every age group over many years, and there is no reason to assume this will stop for at least a while yet. On this basis, the ONS principal projections estimate that 65-year-olds in 2010 will actually live on average until 86 (men) and 89 (women). These are called cohort life expectancies.

So, the pensions minister Steve Webb was not being at all misleading when he said "most 65-year-olds can expect to live until their late 80s".

Glyn Bradley

Mercer Consulting

Instead of pouring money into stock brokers' pockets, the over-50s should contribute some of their pension savings towards the upkeep of the country

Baby-boomer bashing is all the rage. If the Monty Python team in their 1970s pomp were around today they might be asking: what have the over-50s ever done for us? The boomers had a laugh, and the Pythons can take some credit for that. They also tried to tackle social ills such as racism, sexism and homophobia. But on the debit side, they ran off with all the assets, many of them bequeathed by their wartime parents.

So now they sit in all the expensive houses, can lay claim to a huge chunk of the country's stock market investments and almost all the generous final-salary pensions. They are living longer, but rather than pay more tax to fund the pensions bill, they focus on maintaining their benefits (no new housebuilding to keep property prices high and legislation guaranteeing their pensions in perpetuity are two examples).

According to the accountant Richard Murphy, one of the worst crimes committed by pension savers is their failure to divert at least some of their savings into investments for the next generation. If the chief accusation against boomers is their relentless pursuit of a golden retirement with little regard to the cost to everyone else, surely they can put some of their investments into renewing and rebuilding the infrastructure for the next generation?

In a 20-page report, Murphy dissects the subsidies on offer to pension savers and calculates the cost to the taxpayer.

He concludes pension savers receive a massive £38bn subsidy each year, much of which goes on fees and commissions to City advisers. What is left, he reckons, is used to pursue shorter-term gains from a mix of stock markets, hedge funds and private equity, alongside corporate bonds and gilts.

The subsidy in 2008/09 was made up from income tax relief on occupational and personal pensions (£16bn and £4.1bn, respectively). Sundry other tax breaks on various pension vehicles and £8.2bn relief on employers' NI contributions make up the rest.

Murphy, who is one of the country's pre-eminent tax experts, points out that a pension subsidy of this magnitude represents approximately 25% of the UK government's current annual fiscal deficit, 7% of government income, and 5.5% of government spending if repeated in the current financial year.

He says: "To put it in context, this subsidy for private pensions is almost exactly the same as the current UK defence budget. From 1998/99 to 2008/09, pension subsidies to the UK private pension sector cost the government £300bn. That was 48.6% of net government debt at the end of 2008/09 and over 40% of the value of UK private pension funds at that date."

So do we conclude pension saving is a massively subsidised racket for the better off? It's an easy point to make with a disturbing amount of truth in it.

Murphy argues we should maintain the subsidy, but only if the recipients divert at least a proportion of their funds into infrastructure investments and local authority bonds. "Our state subsidised saving for pensions makes no link between that activity and the necessary investment in new capital goods, infrastructure, job creation and skills that we need," he says.

The report was written with Colin Hines, a longtime advocate of a Green New Deal and a pal of Brighton's Green MP, Caroline Lucas. Hines and Murphy argue that diverting £20bn of the subsidy into infrastructure projects would be a sufficient payback for working taxpayers and a younger generation that cannot afford many of the things boomers took for granted.

The pre-coalition Liberal Democrats wanted to cut the subsidy of higher-rate tax relief on pension contributions to achieve greater fairness. Murphy and Hines take the debate a step further. They draw together criticism of pension funds as opaque, antiquated institutions, that cloak costly and often fruitless investment plans in jargon, while spending billions of pounds on advisers, stockbrokers and investment bankers.

The Royal Mail pension scheme's attempt, revealed last week, to break out of its sober investment plans with a £5bn bet on equity futures was mentioned in the scheme's annual report, but in jargon that needs as much translation as hieroglyphics.

Murphy argues that without investment in kids' futures, there should be no state subsidy. Seems reasonable.

Further to Phillip Inman's article (Postwar passions to bring big spike in retirements in 2012, 22 September), it's a shame that ministers have decided to play fast and loose with life expectancy projections to help build a consensus for raising the state pension age more rapidly.

Steve Webb says: "People are now living longer, healthier lives and most 65-year-olds can expect to live until their late 80s." Iain Duncan Smith has raised the ante with a claim that life expectancy "is a staggering 89 for men and 90 years for women". This, however, refers to life expectancy for those born in 2008.

Interesting then that the Office for National Statistics only last October issued data showing that life expectancy in the UK at age 65 in 2006-08 was 17.4 years for males and 20 years for females. Therefore, men could be expected to live to 82.4 years and women to 85, not exactly their "late 80s" in either case.

There is of course a difference between life expectancy at birth and life expectancy at 65 – the latter being more useful in arguments about pensions. There is also a difference between life expectancy, healthy life expectancy and disability-free life expectancy. Such subtleties are important. For men, life expectancy at 65 increased by 4.2 years in nearly two decades to 2006, whereas healthy life expectancy at 65 increased by only 2.9 years – hardly the "incredible increase" to which the secretary of state refers.

Any calculation of the increased cost of pensions based on these false assumptions is certainly over-egging the likely costs of the pensions pudding and exaggerating the need for the population at large to continue singing for their supper.

Chris Ball

Chief executive, TAEN – The Age and Employment Network

Further to Phillip Inman's article (Postwar passions to bring big spike in retirements in 2012, 22 September), it's a shame that ministers have decided to play fast and loose with life expectancy projections to help build a consensus for raising the state pension age more rapidly.

Steve Webb says: "People are now living longer, healthier lives and most 65-year-olds can expect to live until their late 80s." Iain Duncan Smith has raised the ante with a claim that life expectancy "is a staggering 89 for men and 90 years for women". This, however, refers to life expectancy for those born in 2008.

Interesting then that the Office for National Statistics only last October issued data showing that life expectancy in the UK at age 65 in 2006-08 was 17.4 years for males and 20 years for females. Therefore, men could be expected to live to 82.4 years and women to 85, not exactly their "late 80s" in either case.

There is of course a difference between life expectancy at birth and life expectancy at 65 – the latter being more useful in arguments about pensions. There is also a difference between life expectancy, healthy life expectancy and disability-free life expectancy. Such subtleties are important. For men, life expectancy at 65 increased by 4.2 years in nearly two decades to 2006, whereas healthy life expectancy at 65 increased by only 2.9 years – hardly the "incredible increase" to which the secretary of state refers.

Any calculation of the increased cost of pensions based on these false assumptions is certainly over-egging the likely costs of the pensions pudding and exaggerating the need for the population at large to continue singing for their supper.

Chris Ball

Chief executive, TAEN – The Age and Employment Network