National statistics forecast by GAD and the ONS
For a start, the UK looks set to see an increase of 12% in the number of pensioners by 2011. In 2002, the number of people of State Pensionable Age was 10.9 million and that is set to rise to 12.2 million by 2011.
The worrying statistic in all of this concerns the old age dependency ratio, the number of people of working age supporting those receiving pensions. In 2002 that ratio was 3.35. That means that for every pensioner there were 3.35 people at work. By 2031 this key ratio is predicted to fall to 2.5, and by 2050 it may be as low as 2.2.
The UK population will also begin to get older. I donít know if youíre aware of this, but the average age in the UK in 2002 was 39.3 years, anyone younger than that is below average and people like me who are older than that can consider themselves above average. A comforting thought. Now get this, the average age of the population in 2031 is likely to be 43.6 years! It wonít be until youíre in your mid-forties that you will climb above the average age! Well, quite apart from anything else, that makes the notion of retiring at age 50 look a bit on the odd side. I mean, people will hardly have got going lifespan-wise by then.
The mathematicians even go on to predict that the average age for men will continue to increase as life expectancy rises from 75.9 years in 2002 to 81.0 years by 2031. For women the figures are higher coming in at 80.5 years in 2002 rising to 84.9 years in 2031.
The European Commission study concerns the long term sustainability of public finances in European countries. It sees higher taxes as the best way to deal with the European-wide problem of ageing populations.
Another solution was, in fact, proposed by Anna Diamantopoulou, the European Commissioner responsible for employment and social affairs, in a speech she made in Frankfurt last November. In that, she said that Europeís working population, as well as ageing, will fall by 23 million, and that pensions will begin to feel the pressure. In her view, we need to bring our populations back into balance by increasing the length of the average working life.
These are, in fact, the two arguments we have heard many times before. Either we fund pensions by raising taxes, or we work longer. Both solutions are as sensible as they are obvious, but I think that, in real life, things wonít turn out to be so black and white. The amount of money we save for retirement will clearly make an enormous difference. I donít know about you, but even though Iím pretty keen on the idea of living longer Iím not too thrilled at the prospect of working longer than I have to. Maybe Iím not normal, but Iíve always thought most people felt the same about these things.
Thatís why I was quite pleased to see the comments made by the International Monetary Fund (the IMF) a couple of days before Christmas where it gave backing to the UKís private pensions model by saying:
ďUltimately, for the state to avoid contingent pension liabilities, it is critical that the private sector save sufficiently. To that end, we view the governmentís strategy of promoting voluntary private savings for retirement as appropriate.Ē
9 January 2004
All information included has been produced by us for our own purposes and the results of it are being made available only incidentally.