The smoking ban is likely to encourage many people to quit smoking which Hargreaves Lansdown says will lead to increased longevity and therefore a need for more money in retirement.
The smoking ban comes in to force in England on July 1 and according to the Office for National Statistics, average cigarette consumption is around 13 per day for women smokers and 15 per day for male smokers.
The cost of this averages at around £100 per month per person and Hargreaves Lansdown says quitters should consider channelling this money into a pension to allow for increased life expectancy.
According to the 50-year British Medical Journal study, men who quit at the age of 30 can ‘regain’ ten years of life expectancy.
Hargreaves Lansdown says that for someone retiring at age 65 and saving £100 per month, starting at age 30 will produce an extra pensions of £3,300 a year in today’s terms.
Starting at age 40 will produce an extra pension of £2,000 a year.
Hargreaves Lansdown head of pensions research Tom McPhail says: “The difference between smoker and non-smoker annuity rates is currently around 18 per cent for a 65 year old man, so in order to buy the same level of income as a smoker, a non-smoker would have to build a pension fund 18 per cent larger. in order to qualify for smoker rates, a pension investor must be able to confirm that they have smoked at least 10 cigarettes a day for the last 10 years.”