Life Expectancy is On the Rise in the UK, Leading to Change in Pension Age

The past few decades have been characterized by drastic changes in technology, which led to a complete 180 when it comes to how our society looks. Those changes have brought many wonders into our lives. For example, you have the internet, which grants you access to information and games such as online poker, not to mention medical care that can help you have longer and healthier lives.

People now live longer than ever before, and it comes down to two main factors: lifestyle changes and improvement of health-related treatments. Every year, new drugs are created to ease pain and illness, new surgeries reduce post-op risks, and the awareness of what is healthy and what is not is growing.

The result of all those changes is an increase in life expectancy and with it the rise in pension age. In the past, pension age stood at 60 for women and 65 for men. As of November 2018, pension age in the UK reached 65 for both genders, and the plan is for it to rise to 66 by October 2020.

In 2014, the Pension Act outlined a plan to increase the pension age to 67, and it is expected to happen by 2028. In the future, it will probably increase even further as people will live longer.

Ageing Statistics in the UK

Many people find it hard to understand why the UK government keeps raising the pension age, but the answer is pretty simple: 65 can no longer be considered as old age! Nowadays, a 65-years-old man can expect to live for at least 18.6 years, while a woman will probably live for 21 years.

That means that more and more people who reach pension age keep working, as they are healthy enough to do so.

According to the Office for National Statistics, economic dependency showed signs of improvement between 1992 and 2017, even though the general population is becoming older. In fact, the growth of economic activity in citizens over the age of 50 outpaces growth in any other age groups. Statistics show that the growth in economic activity can be partly attributed to higher numbers of women working at an older age.

The report also mentions that by 2050, one in four people in the UK will be aged 65 or over, so the state should be ready to deal with the situation at hand.

Economic Implications of the Rise in Life Expectancy

Even though more people work after reaching pension age, it is still not enough to offset the economic effects of the rapid pace in which the population ages. Since 1998, the number of people aged 65 and over in the UK increased by 2.7 million. In the meantime, the number of 65-years-old workers increased only by 800,000.

That means that at some point, the state will have to support more and more pensioners. According to the Office for Budget Responsibility, state pension expenditure will account for 6.1% of GDP by 2042. In 2017, the numbers stood at 5.1%, and in 1992 the rates were even lower: 3.6% of GDP.

The government has to come up with a plan on how to deal with those economic changes, instead of waiting for a crisis to hit.

In Conclusion

People have been saying that 70 is the new 65 – and they are not wrong! The older generation in the UK now have longer, healthier lives, thanks to changes in lifestyle habits and improvement in health services.
Since people are still capable of working even after reaching what is now considered as the pension age, society has to adjust accordingly to ward off any potential financial calamities. Do you think those changes are good or bad? Let us know!