Aging Britain and the Cost of Pensions
AGING BRITAIN AND TH E COST OF PENSIONS – In 1907 the Government thought it a good idea to introduce State Pensions; indeed the working population happily accepted it but did the Government really understand the consequences?
The answer is clearly ‘no’ for at the time state pensions were only awarded to people over the age of 72 and with an average life expectancy of just 45 years of age the Government calculated that it really wouldn’t cost the country that much money.
In 1961 there were approximately 600 people over the age of 100 in Britain and today in 2013, there are now 14,000.
This year alone 767,000 men and women will reach the pensionable age of 65 and the Office for National Statistics (ONS) predicts that by 2057 the potential average life expectancy could be as high as 116 years of age.
With on-going medical advancements there can be no doubt that we are living longer and with an ever increasing quality of life.
In the 2012 / 2013 tax audit, the ONS reported that state pensions and other payouts including pension credits, cost a staggering £94 billion but with current trends in an increasingly aging population, this figure is expected to balloon to some £440 billion by the audit year 2062 / 2063.
From 2014 the state pension will raise to £113.12 a week; an increase of some 2.5%, however with the cost of the average weekly shop is likely to have risen by 4.8% and with the continuous increase in fuel bills, it is not rocket science to understand that most pensioners will struggle to survive.
Government has been fully aware for decades that the UK has an ever increasing aging population and that providing funds for pensions from the Treasury will not only cost more money but could well bankrupt the UK.
This issue is exasperated with the inflated cost of welfare as a whole and when you have an increasing youth population that feels ‘entitled’ to state hand-outs and refuses to work, the entire system begins to crumble; in fact we are already seeing signs of it and with Britain’s national debt now at over 500% of GDP (in other words we spend 5 times what we earn) it is not surprising that many feel Britain could well go the same way as Greece – after all their debt stood at just 267% of GDP when the country finally declared bankruptcy.
The Government is now again looking at state pensions and the Chancellor has announced that the pensionable age will rise to 68 by 2030 and 69 by 2040 but is this too little, too late?
A number of experts are voicing their concerns that this and previous Governments simply haven’t woken up to the harsh realities that challenge Britain’s social and economic future.
It has already been widely acknowledged by the Government and the general public that we now live in an ‘entitled’ society and unless we can change and change fast there will be nothing in the pot to be entitled too.
Some experts suggest that we need to start teaching our children basic economics and financial planning at a very early age so that they can fight against Government dependency for their old age.
It is no longer a case of how much the Government can provide pensioners but rather, will it be able to in the not too distant future. We certainly have an ever growing savings gap and whilst current low interest rates allow the Government to sustain the current level of debt it doesn’t provide much in the way of investment in order to meet the ever growing pension cost.
There can be no denying that we face the very realisation that an impoverished old age awaits many of us.
Britain has become a nation of ‘spenders’ in order to fuel our materialistic needs and yet the continuous debt we accumulate will be passed to future generations who will almost inevitably spend their entire lives paying for the debt of ‘entitlement’ today.