23 August 2019
If you are covering the latest population data from the ONS, please see the following commentary from David Gibb, financial planner at Quilter. The figures project that one in every four people will be aged 65 and over in less than two decades time by 2038, up from around one in six people in 1998, and one in five in 2018.
“The UK population is experiencing a significant long-term shift toward an older population mix, with one in four people expected to be age 65 and over within the next 20 years. That gradually places increased pressure on age-related public spending, from state pension costs, which already account for a huge share of the government’s annual expenditure, to care provision in later life. The government is grappling with these issues and has struggled to form coherent long-term policy because any proposal is likely to be unpopular.
“When it comes to care, the state is reluctant to absorb the cost and wants to share the bill with affected individuals, but many voters see this as an unfair penalty on those unfortunate enough to suffer from age-related illness, which is why Theresa May’s social care proposals were quickly labelled a ‘dementia tax’.
“Likewise, the government has conducted periodic reviews of state pension age, accepting that in order to keep the costs as a share of GDP at a sensible level, it will have to increase retirement age gradually. There are already expected increases to 69 due to kick-in and the long-term direction of travel means that state retirement age is likely to be increased further. We’ve even seen some speculation from think tanks that the state pension age could increase to 75, although the DWP has strenuously denied this has any link to government policy.
“Nonetheless, the important thing for people to be aware of is that the financial pressure of an ageing population will continue to influence a shift toward personal responsibility for later life finances. The decline of defined benefit pensions and the death of the annuity in a low interest rate world means that institutions no longer bear the liability for funding our retirements, and this is instead shifting to the individual. Similarly, a rising state pension age means people will be increasingly dependent on private savings if they want the freedom to decide when they retire.”
Gregor DavidsonExternal Communications Manager
If you are covering the House of Commons Public Accounts Committee’s report on the management of tax reliefs, please see the following comment from Ian Browne, retirement expert at Quilter:
If you’re covering Theresa May’s announcement that heterosexual couples will be able to enter a civil partnership please see the following comment from Rachael Griffin, tax and financial planning expert at Quilter.