The Ageing Economy

The BBC state that the ratio of working age people over 65 in the UK could fall from 3.7 to 1 in 1999 to 2.1 in 1 by 2040.

This ageing economy is a worry for Western governments as the over 65s tend to pay lower income taxes, while higher pension payments are being made by the working population.

This issue is accentuated as current spending pension obligations have placed a greater burden on the decreasing population of workers as they may have to pay more in taxes to offset this cost to look after the retired.
This could lead to an unwillingness within people to work creating a detriment to businesses who could become discouraged to invest resulting in a reduction in productivity and growth.

Forecast for dependency ratios in different countries

AgeEcon ForecastDependancyChart

Source: Dept for work and Pensions

This shows the extent of the dependency issue, across Western Europe.

In recent news there’s been a lot of talk about immigration and the above issues are substantial considerations into how immigration can be used to help our economy. Forbes (Aug, 2013) discussed how immigrants in general are younger and [immigration] is our best way to fight against a growing ratio of retirees to workers.

Age breakdown of England population by national population projections (2012 and 2032)

  • From 2012 to 2032 the populations of 65-84 year olds and the over 85s are set to increase by 39 and 106 per cent respectively
  • Whereas 0-14 and 15-64 year olds are set to increase only by 11 per cent and 7 per cent respectively.

AgeEcon AgeBreakdownTable

Source: 2001 census and 2011 census population estimate – Office for National Statistics (2011). Statistical Bulletin. 2010 based population projections, October 2011

The government have sought to “offload” this burden and ensure that businesses look after their employees for the considerable future. Auto enrolment is one of these initiatives that has already begun to take affect across UK business and will slowly make its way into every business until 2018 (find out your staging date here).
So, do you know what this means for your business and how much it will cost you to invest in your employees?

“When I was young I thought that money was the most important thing in life; now that I am old I know that it is” – Oscar Wilde

We are all working towards something in our lives, both short-term and long. The things that we enjoy and that are important to us all have a financial cost, that’s the simple fact of life, so it’s important that all our efforts are managed in a way that enables us to make more of them.

Ernest Grant and Zenith Benefits help you as an individual and as employer or employee, monitor and manage your wealth.
Lifetime Financial Planning – for a more prosperous future.