This publication explains the structure of the ageing population and provides evidence on what this demographic shift means for the economy, services and society.
Steven Cameron, Pensions Director at Aegon comments on the findings of the report: “ONS’ latest report shows that as the population profile of the UK continues to age, it’s increasingly important for Government to deliver ‘intergenerational fairness’ across a wide range of policies from employment, health and housing to pensions and social care. This should be a specific test in all new Government policymaking.”
“We know that on average, people are living longer, although the pace of increases in longevity may be slowing down. But we need to look beyond the averages. For example, life expectancies vary significantly between geographical regions and individuals risk running out of money part way through retirement if they fail to accurately calculate their income needs.
“Living longer is great news if you have the resources, and good health, to enjoy it. And that applies both as individuals and as a society, with the Government already facing difficult decisions around how to fund the NHS and with further challenges to be addressed with social care funding. Equally, individuals need to have a clear understanding of what the Government will provide and what they’ll be expected to pay if they need social care in the future. This must include an overall cap on personal contributions so people can plan ahead while protecting inheritance aspirations.
“As an economy, the key is to offer people the opportunity to remain economically active for as long as they want, and remain fit and healthy. This requires a concerted effort to ensure employers embrace the contribution older workers can bring. It’s positive that Aegon research shows the UK is ahead of other EU countries with individuals in the UK more likely to want to transition gradually from work to retirement rather than a ‘sudden stop’ at state pension age.
“But we also need to make sure we protect those who through health or work pressure find it unfeasible to work to an ever increasing ages. With the state pension age due to keep rising with life expectancy, there’s an increasing need to allow those who can’t work to advanced ages to opt to take their state pension from a younger age, suitably reduced to make it cost neutral.”
Aegon research
• Aegon has carried out research showing what life is expected to look like for many at age 70, revealing that one in four expect to still be working at 70 and 14% of people think they will still be paying their mortgage at age 70. Working into later life is only possible for those who remain in good health, and 45.8% of people believe they will still be fit and healthy enough to work if they choose to at the age of 70. Our research is broadly in line with ONS data which shows that employment rates doubled for those aged 65 years and over between 1993 and 2018, and increased by almost one-third for those aged 50 to 64 years.
• Social care provision remains high up on the agenda of topics requiring urgent Government action and our research shows that many remain unsure about who should foot the bill for care in later life. 64% of people agree there should be a cap on the total amount individuals should pay towards care. Across all age groups around two thirds of people agree state and individuals should share care costs. More than half (57%) want to exclude their property from the assets used to pay for care costs.
• While centenarians make up a very small proportion of the UK population, their numbers have grown rapidly and increased at a faster rate than any other age group between 2002 and 2016. This demonstrates that people are living to higher ages than ever before. The ONS figures published today show that half of baby girls born in 2066 are expected to live to age 100. With people living longer many people taking advantage of pension freedom through income drawdown are at risk of running out of money part way through retirement. Aegon analysis calculates how much an individual could take out each year to run out of money to coincide with average life expectancy, assuming investments grow by 3.25% each year after charges. This shows that while a 65 year old male in Scotland might be able to take up to £7,445 a year without running out of money before average lifespan, a female of the same age in England (where life expectancy is highest) will run out if taking any more than £6,490 a year, which is £955 a year less.
• Aegon research shows that the concept of retirement is changing with more people choosing to work past traditional retirement ages, or reduce their hours gradually. Workers in the UK were previously more likely to move straight into full retirement after giving up work with half of current retirees taking this option. Retirement has become an active stage of life with people remaining economically active. In fact, the majority of UK workers, 61%, see some form of transition to retirement where they continue working as they currently are or work part time for a while during their ‘retirement’.
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