“Building a society for all ages”

The deadline has now passed, at least for the moment, to make your voice heard to the government over their proposals outlined in “Building a society for all ages” a document which focuses predominantly on the issues surrounding our ageing population. The issues are very wide-ranging and extremely important.

We here, at in my prime, made our own representations in the fields in which we operate and if you are interested in seeing what we had to say please click here 

To read the original government document click here

A ton of things to sort out.

Research published in The Lancet and reported widely in the press this week (for more see www.inmyprime.info) predicts that about half of the children now being born in wealthier countries can expect to live to be 100 or more. Furthermore, with better and earlier medical intervention many of these later years can be free of serious disability. This Danish/German research adds more weight to the ever-growing need to address the issues surrounding population ageing and to acknowledge that the concept and definition of old age needs to be re-examined, mindsets changed and prejudices challenged.

The researchers have even suggested that the lifespans of people should now be considered in four stages: child, adult, young old age and old old age. This is something which those of us who specialise in the field have been banging on about for some time – it is just not possible to lump people who have reached a certain age all together and assume that they are elderly and that their active and useful lives have come to an end, along with their judgement, taste, ability to think for themselves and so on. We are talking about a 50-year time interval here – potentially half of one’s life. And if in “old old age” we can be independent and moderately healthy then what does it say for “young old age” or in my prime as we might describe it?

But living this long is not a “given”. It is dependent on many things – financial security, physical and mental well-being, a good reason to want to live that long, and adequate safety nets for when we might become old or infirm.

The serious debate is only just beginning.

 

 

Not such a heyday

News of a long-predicted collapse that for once has nothing to do with the credit crunch. Heyday, launched as a rival to Saga in 2006 with £22m funding from Age Concern, is finally being wound up following a damning Charity Commission report on its governance. The report marked the final nail in the coffin for a venture which from the start was based on an “entirely flawed proposition” according to industry experts such as Kevin Lavery from specialist over-50s marketing agency Millennium. Quite rightly he commented that “you should never sell services to older people on the basis of age”.

Our own view from the outset was that not only is Heyday an appallingly twee name, but few individuals are likely to want to pay for something that is either already freely available through other sources (e.g. social networking and other websites) or already done far better by existing providers (e.g. Saga  and other commercial specialist interest magazines).

The most worrying aspect of the whole sorry debacle is the extent to which Age Concern who should, if anyone, possess a detailed understanding of the nature of the mature market, seemed completely oblivious to the fact that the over 50s do not – and never will – represent a single unified cohort . What appeals to one 50 year old will not necessarily appeal to another; what appeals to a 50 year old will not appeal to a 75 year old. People do not define themselves or their interests primarily on the basis of age.

The fact that Age Concern (newly amalgamated with Help the Aged) is in a hugely influential position in terms of providing policy and advice to government and other key bodies and yet can have such a blinkered and unrealistic view of its own customer base is deeply disturbing. What other misguided and fatally flawed initiatives are going to result?

The tipping point – we are there!

When we set up in my prime we thought that our main point of focus was on the 50 to 75 year old section of the population which was clearly not elderly but was perceived so by the rest of the universe and, indeed, many members of that generation themselves. In consequence the legend we attached to our name was “in my prime – for mature people re-thinking their lives”.

This is still very much our area of activity but it is now quite obvious that if we wait for people to reach that magic age of 50 or thereabouts it is likely to be too late to put into place the groundwork necessary for that part of our lives to be truly “in our prime”.

The demographics have been heading only one way for some years now but, we believe, government, employers, and individuals themselves have been in denial hoping the problem will go away, won’t affect us personally, or somehow will be someone else’s problem, despite some introductory measures such as Age Discrimination legislation. It is quite apparent that none of these is true and that the march of time has finally caught up with us. It has also been brought into very clear perspective by the arrival of the credit crunch and the recession. To roll together a couple of very apt quotations, “Only when the tide goes out can you see the rocks on the sea bed or who’s swimming naked”.

House prices have fallen, pension funds have been depleted, savings levels have dropped and jobs are disappearing. All at a time when we can expect to live longer and longer. The issue, therefore, does not relate solely to those who are in their prime but also to anyone who hopes at some stage to reach that position – it is an issue for us for all of our working lives – from the beginning to the end, and beyond.

Here now we provide an analysis of the latest official UK statistics which show just what is happening and will be happening.

The period from 1971 to 2007 has seen the UK population grow from 56 million to 61 million, that is overall quite slowly, but it is now forecast to continue increasing at the rate of about 2 million every 5 years reaching 71 million by 2031. However, these figures mask a range of changes taking place and issues arising within these figures.

The number of children required per woman to keep the population steady is 2.1 but the present rate, although rising from an all time low in 2001 of 1.6, is only 1.9 (2007), on its own suggesting a drop in population. The increase is coming from people living longer and from a net migration inwards. The increase from 2007 to 2031 is reckoned to be 47% due to net migration and 53% due to net natural change. As a result of the low birth rate we will see fewer young people entering the potential workforce pool.

Despite the current recession, which we have to assume we will come out of, the implications of this looking into the future are: skills shortages; initiatives to bring more women into/back into the workplace; increased numbers of workers from other countries; the need to retain older workers.

With lower birth rates and greater longevity we see that, within the total UK population figure there is a huge shift in demographics. In 1971 nearly 7 in 10 were under 50 and 3 in 10 were 50 plus. By 2031 the proportion of those over 50 will have reached nearly 4 in 10. Currently, slightly over one third of our sixty million people are over 50, that is in excess of 20 million.

At the end of 2008 it was headlined in some newspapers that we are now a nation of pensioners. The reason is that for the first time the numbers of those reaching state pension age (65 for men and 60 for women) had overtaken, just, those who are under 16, the percentages being about 19% of the population for each.

Hence, we are about to see the first of the measures coming in, starting in 2010, to try to redress the balance, particularly in respect of the demands on the public purse. Between 2010 and 2020 the state pension age for women will be increased until it reaches 65, the same as for men.

And so adjusting our numbers for this we can see that the 2007 figures for those 65 or over consequently drop to 16% compared with the 19% for those under 16. However, this is only a temporary respite and by 2021 we are back to equal percentages again. And from then on it becomes progressively more and more stretched. Only 20 years later, in 2041, almost one quarter of the population will be 65 or more, 17% will be under 16 and the working population, needed to support both ends of the spectrum, will constitute 59%.

Looking at this in the context of the “support ratio” as it relates to older people, that is financing their state pensions, health costs, welfare etc., we see that in 1971 there were 4.6 in the 16-64 arena for each person of 65 plus but this drops to 2.7 by 2031 and only 2.1 by 2081.

And so we see the second of the state pension measures being introduced. Between 2024 and 2046, in three phases, the state pension age for both men and women will be raised from 65 to 68. People will be expected to work longer and, obviously, the default retirement age will have to move by at least this, if not scrapped altogether, although this has yet to come.

And how does this longer working life fit into the context of our total lifespan?

There are 2 ways of estimating life expectancy used by the Office for National Statistics (ONS). The one most quoted, “period” life expectancy, is arrived at by presuming that the existing mortality rates at a particular time will continue on into the future. However, the one which ONS believes gives a better picture of expected longevity builds in the anticipated changes (to date improvements) in mortality going on into the future and therefore to be experienced by the people (“cohort”) concerned.

For a man who reached 65 in 1981 the period life expectancy was to live to 78, and for a woman to live to 82. By 2006 this had increased to 82 for a man and 85 for a woman. However, if we take into consideration improving life expectancy a man can, in fact, expect to live to 86 and a woman to 88. And, on this basis, a man reaching 65 in 2030 may expect to live to 88 and a woman to 90. By 2056 the figures become 91 and 93 respectively. The issues are certainly not confined to only today’s over 50s.

With improving mortality a male born in 2006 has a life expectancy at birth of 88 and a female of 91. If they reach 50 years old they can then expect to live to 90 and 93 respectively. The chances at birth of reaching 65 are now 91% for a male and 94% for a female and will provide life expectancies of around 92 and 94 respectively.

And so the figures pile up. Greater chances of living to 75, 85 and 100 plus and a larger and larger proportion of the population made up of the elderly.

And what does this say for our retirement? Well, even with the state pension age rising to 68 for both men and women, we will see an anticipated retirement of around 22 years for men and 24 years for women. The notion that retirement is a few twilight years after a lifetime of slog is no longer relevant.

And 22 or 24 years is a long time to finance oneself without working, a long time to fill in an interesting, fulfilling and valued way, and a long time to stay physically and mentally healthy. It means people will work for, say, 40 to 50 years and then be without paid employment for 20 to 25 years. In itself this is a lot of years but it is also a large proportion of one’s life.

But length of life is not automatically associated with quality of life and, although life expectancy is increasing, a number of our final years will be in less than perfect health. The Office for National Statistics calculates two types of health expectations in this respect. Healthy Life Expectancy (HLE) defines healthy life as years in good or fairly good self-perceived general health. Disability-free Life Expectancy defines healthy life as years free from limiting longstanding illness. On average men can expect about 7 of their final years to be associated with a limiting longstanding illness and women about 9 years. There is still a lot to do.

It’s all very well increasing retirement ages but will we be fit enough to work and will the workplace provide an appropriate environment?

In terms of working longer we are already seeing increasing numbers of people working on beyond state pension age. Since 2000 the proportion of men of 65 and over who are working has increased from 7.3% to 10.6%. And for women of 60 and over the figures are 8.4% and 12.5 %. The latter figure will obviously increase as the state pension age increases for women start to kick in. Although these numbers are still fairly low in absolute terms they are growing rapidly as many people choose or feel the need to continue working longer.

Statistics to die for

Last Wednesday, October 29^th, I attended a Joint Conference organised by the International Longevity Centre ( ILC-UK) and the Actuarial Profession entitled “Choosing Population Projections for Public Policy”. Not everybody’s idea of fun you might think but, nevertheless, it’s amazing just how much impact a debate like this has, or more correctly should have, on the well-being of every single one of us.

By now we should all be aware that people are living longer, people are going to have to work longer and that the country is going to have a lot of difficulty in finding the resources, financial and otherwise, to cope with the huge increase in the older population. The implications of all of this, therefore, permeate thinking in terms of retirement age, pensions, insurance, housing, health care, social care, transport and a host of other things.

Such thinking, and consequent planning, relies heavily on projections of population size, life expectancy and our state of health as we get older, not just a few years away but going deep into the future. The problem is that there is no consensus on what these figures are or even how they should be computed, nor who might be seen as tasked with turning these projections into a workable set of forecasts on which decisions can be made. And this provides an ideal opportunity to ignore the figures, to manipulate them or to be very selective in their use.

So what do the decision makers think of all of this – in particular those in government? The issues we are talking about need to be looked at in the context of answers that will see us through in the year 2030, in 2050, and well beyond. And the potential costs are huge – billions and billions. What it takes are people of statesmanlike vision and stature to guide us through. What we have is party political posturing which is only concerned with the short term and looking good at the next election.

And where better to lay the blame than on figures “we are not sure of”?

The elephant has landed

So what are the facts as far as the emerging demographics are concerned? The following are just some of the statistics we have analysed, all based on data from the Office of National Statistics and the Government Actuary’s Department.

By 2031, less than 25 years away, over one-third of the UK population will be over 55, while 22% will be over 65. There are two major implications of this. Firstly, the working lives of individuals will have to extend beyond 65 to ensure that there are enough in the workforce to meet the nation’s needs. Secondly, the notion that retirement is just a few twilight years after a lifetime of slog is no longer relevant.

Retirement is likely to cover a considerable amount of time and must be paid for. However, those aged from 16 to 64 will not be enough in number to fund the retirement of those of 65 plus. The dependency ratio, which has been falling for a very long time, falls even further. In 1971 there were 4.6 people in the 16 – 64 bracket for every person of 65 plus but this will fall to 2.7 by 2031. It just won’t be possible or acceptable for those working to fully support those in retirement.

We are, therefore, seeing the harmonisation of men/women retirement ages, the gradual increase in all retirement ages, and severe pressure being put on personal and state finances in respect of such things as pensions, health costs and care costs for the elderly.

Looking at life expectancy in more detail, in short people are living ever longer. Taking into account improving mortality rates men of 65 now can expect to live until they are 86 and women to 88. And the trend of greater and greater life expectancy will continue for the foreseeable future. Current 40 year-olds who make it to 65 can expect to live into their nineties or very close to.

Even with increased state retirement ages, it appears that men will have a retirement of about 22 years to look forward to and women will have about 24 years. However, 22 or 24 years is a long time to finance oneself without working, a long time to fill in an interesting, fulfilling and valued way, and a long time to stay physically and mentally healthy. It means people will work for, say, 40 to 50 years and then be without paid employment for 20 to 25 years. In itself this is a lot of years but it is also a large proportion of one’s life.

But length of life is not automatically associated with quality of life and, while life expectancy is increasing, a number of our final years will be in less than perfect health. On average men can expect about 7 of their final years to be associated with a limiting longstanding illness and women about 9 years. There is still a lot to do.

In terms of working longer we are already seeing increased numbers of people working on beyond state retirement age. Over the past two years the general increase in working numbers has been in total about 2%. However, for men over 65 the growth has been 12% and for women over 60 the growth has been nearly 15%. Although these latter figures are still fairly low in absolute terms they are growing rapidly as many people choose or feel the need to continue working longer.

What the numbers are telling us

Introduction

The world seems to be hotting up as far as older workers are concerned with an increasing number of surveys and statistics now being published and commented upon in the public arena. The only problem is that we are receiving mixed messages from all this information, in part due to the way it is being collected and interpreted.

This may be because we now really are reaching the “tipping point” whereby those issues which have been “just around the corner” for some time have finally reached us and the tension is beginning to show. However, the cultural and attitudinal changes required in the workplace are not yet generally accepted as inevitable and so a vigorous rearguard action is being fought.

Furthermore, with an ageing population, there are also any number of societal ills to be confronted and political points to be made and so there is endless scope for using the information for whatever end seems appropriate. That is not to say that there aren’t some very urgent issues which need to be addressed and which will affect everyone. Below we provide a few illustrations of the information which has recently become available.

Latest employment statistics

The latest employment figures published by the Office of National Statistics show a generally buoyant picture for the year just gone although this may be the calm before the storm, if the economy takes a significant downturn this year.

What is of particular interest to us is what has been happening to the over 50s employment position. The hard facts are that the UK finished 2007 with 29.4 million in employment, an increase of 296000 over the previous year. Of this increase 172000, or nearly 60%, is accounted for by the over 50 population. The total of over 50s in work was some 7.8 million, the highest total since records began. There genuinely does seem to be a trend for people to be working till later in life.

These then are the bare facts and they have been the subject of varying interpretations in the press. The Daily Mail has suggested that the “Over 50s are being forced back to work to meet rising bills”. They go on to say that “Poor pensions, sick partners, elderly parents and grown up children who need financial support are common causes for working, rather than retiring.”

While we would agree with the various reasons for continued working, their first assertion sits uneasily with the perceived difficulty for over 50s to find employment and the received wisdom “that most new jobs are being taken by migrant workers – a group overwhelmingly aged under 40” (CIPD). The Chartered Institute of Personnel Development go on to suggest that the explanation is that migrant workers are taking most of the new job vacancies but that older workers, in place, are staying in their jobs and delaying retirement.

Whether this latter phenomenon is due to financial pressures forcing older workers to cling on to their jobs, or a perception by employers that there really is a growing skills shortage, or the realisation that lifespan is increasing rapidly and will need to satisfactorily filled, much remains still to be understood.

However, for the foreseeable future it will remain much easier for older workers to remain in place than to find new employment. Hence, anyone contemplating retirement whether to enjoy those “golden years” or because they are sick of working, should make sure that they have thought it all through fully and carefully.

One in five still pressured to retire by their employers

Portraying a different perspective on the UK employment scene, research by leading insurer AXA has revealed that, despite the introduction of age discrimination legislation in 2006, ageism is still rife in today’s workplace with many retirees experiencing pressure to quit their job by their employers.

Of those retiring early, whilst 80% did so through choice, one in five (20%) experienced pressure from their employer. This, at least, is down on the previous year’s figure of 28%. For the full AXA press release click here.

And More….
And so the plot thickens.

More work by the CIPD suggests that the demand for working beyond 65 looks set to increase markedly in the next 15 years. Based on a survey of 1000 workers aged between 50 and 64 years, it finds that just under two-fifths (38%) of individuals plan to carrying on working beyond 65. Currently only 11% of the workforce work beyond State Pension Age.Interestingly, among those who said that they did not plan to work past 65, 31% would change their mind if their employer allowed them to work flexibly.

For the full CIPD press release click here.

And in another study, Stepstone, an online recruitment firm, suggest that in Europe, America and Asia companies have admitted for the first time that older workers are the key to filling the skills gap, although they have done little about it to date.

And all of this is taking place in a climate of increased and increasing life expectancy and pressure on pensions. The UK Pensions Regulator is now going to require that company pension schemes assume that for men retiring today at 65 they will live to at least 89. This will put even more pressure on the continued existence of defined benefit pension schemes.