"The shape of the population has dramatically shifted over the last few years and the trend of a growing number of older people per working person is one that seems as inevitable as the aging process itself. Projections from the ONS shows that nearly a quarter of the population (24%) will be 65 or older by 2042. This has substantial implications on the economy and the state of the nation’s finances.
“As the ONS rightly highlights the old age dependency ratio is outdated. It does take into account that the cliff edge of retirement is now more of a gentle incline with people phasing out of work. Their predictions show a massive 40.34% more of 65 to 69 year olds will be economically active in 2067 (50.55%) compared to 1992 (10.21%). A large proportion of growth has already occurred, driven primarily by a 29% increase in the number of women aged 60 to 64 working.
“The ONS propose starting to utilise an Active Dependency Ratio (ADR), which takes into account the size of the economically inactive population. There are a number of issues with the ADR which the ONS themselves highlight. Including that while people may be economically active they may not be economically independent and so still may be in receipt of the state pension or other benefits. Still a better measure would be welcome.
“While older people are working longer it is by no way decreasing the strain on the state’s finances and an accompanying research article from the ONS shows just how painful this is going to be, particularly because of the amount needed to fund the state pension – a mind boggling £9 billion in 2017. This is 5.1% of GDP and is expected to rise 6.1% of GDP by 2042.
“The ONS are not sitting on the fence when it comes to moving the timetable forward to raise the state pension. They staunchly point out that by raising the state pension age to 68 in 2039, seven years earlier than currently projected, there would be 23 fewer pensioners for every 1,000 people of working age.
“With the government continually hinting that it needs to shift its position as a nanny state people need to ensure they are making enough provision for themselves. Reliance on the state is not a safe bet.”