The famous lyric from the Beatles song of 1967 has moved from an individual plea to a loved one, to a more general appeal to society. A lot has happened between 1967 and now: man has landed on the moon, the Communist Soviet Union has disintegrated, almost everyone has amazing technology at their finger tips and we are now living longer than ever before.
If you were an 18 year old in 1967 you would be one of the Baby Boomers joining the UK workforce for the first time. You are now 64 and possibly looking forward to your pension and retirement. The state pension age has been stuck at 65 for men and 60 for woman for that person’s whole life. Whilst the rest of the world has changed at an alarming rate, the “Old Age Pension” age has remained the same.
The opportunity to be a retired pensioner is a relatively recent occurrence. Prior to the Old Age Pension Act of 1908 there was no state help and it was looked at as being semi villainous to be old with no money or means to support yourself. You either begged, starved, or if you were lucky (or maybe unlucky) you ended up in the Workhouse. However, this act only came into force if you were over 70 and without means of over £31.50…….per year! It wasn’t until the National Insurance Act of 1946 that we saw the introduction of a comprehensive social security system that covered unemployment, sickness and retirement, as we know today.
We all know that there is an ageing population problem, but what is it and what does it mean? Let’s have a look at some of the data that is freely available at the UK Office of National Statistics.
In 1967 the life expectancy for a man was 69.1. This meant that a man, on average, only lived for four years after reaching the state retirement age of 65. In 2010 the life expectancy for a man in England had grown to 78.9, almost an eight-year increase in only 43 years. If, however, you reached your 65th birthday in 2010 you were expected to live until a whopping 83.4. This means that over the last 43 years a man has been living on average one extra year for every 3-5 years lived – really astonishing.
The trend looks to carry on, with the expectation that 33% of children born in 2012 will live to 100. In 2012 there were 14,500 centenarians – by only 2035 it is forecast that there will be 110,000.
The actuaries have got their figures hopelessly wrong in the past. Private and public pension promises that were made to workers cannot be fulfilled. Bear in mind that in developed countries, 60% of the cost of an average pension is paid by the state.