Population Ageing

1
Population Ageing Economic Welfare
Centre for Research on Ageing School of Social
Sciences University of Southampton

• Jane Falkingham
• SAGE Research Group
• Centre for Research on Ageing
• University of Southampton

2
Population Ageing Economic Welfare

• Dependency ratios and demographic determinism
• Economic position of todays older population
• Thoughts about tomorrows older population
• Will we be better off than our parents
  in old age?

3
Dependency ratios and demographic determinism

• Classic Demographic Dependency Ratio
• 0-19yrs 65yrs
• 20-64yrs

4
Old Age Dependency Ratio Base Case Projection
and the impact of the baby boom
Figure 1.9 p11, Pensions Commission (2004) First
Report
5
Source European Commission (2005) Confronting
demographic change a new solidarity between the
generations. EC Brussels.
6
Economic Dependency Ratio

• non - economically active pop.
• economically active pop.
• Many things other than age determine whether a
  person is dependent
• Unemployment
• Female labour force participation
• Early retirement
• Migration

7
A long run view of the labour market
8
Source P. Johnson and A. Zaidi (2004) Work over
the life course Discussion Paper No. 18, ESRC
SAGE Research Group, London School of Economics,
London.
9
Source P. Johnson and A. Zaidi (2004) Work over
the life course Discussion Paper No. 18, ESRC
SAGE Research Group, London School of Economics,
London.
10
Economic dependency ratios

• falling fertility and
• increasing female labour force participation has
  meant that
• economic dependency rates have fallen across the
  20th Century
• BUT
• 21st Century ??

11
Source A. Baschieri, M. Evandrou and J.
Falkingham (forthcoming 2006) Working life
trajectories results from SAGEMOD Technical
Note 14, ESRC SAGE Research Group, London School
of Economics, London.
12
Source A. Baschieri, M. Evandrou and J.
Falkingham (forthcoming 2006) Working life
trajectories results from SAGEMOD Technical
Note 14, ESRC SAGE Research Group, London School
of Economics, London.
13
Economic position of older people today
14
Rising Pensioner IncomesAverage gross income,
1994/5 and 2004/5
Source DWP (2006) The Pensioners Income Series
2004/5, Table 2.1 Note Incomes in per week,
2004/5 prices
15
Work histories by gender, people aged 65 and over
in the 1990s.
Source T. Sefton, M. Evandrou and J. Falkingham
(forthcoming 2006) Income in later life. Do
family and work histories matter? Discussion
Paper ESRC SAGE Research Group, London School of
Economics, London.
16
Receipt of private pension by work history
Source T. Sefton, M. Evandrou and J. Falkingham
(forthcoming 2006) Income in later life. Do
family and work histories matter? Discussion
Paper ESRC SAGE Research Group, London School of
Economics, London.
17
Mean value of private pension by work history
Source T. Sefton, M. Evandrou and J. Falkingham
(forthcoming 2006) Income in later life. Do
family and work histories matter? Discussion
Paper ESRC SAGE Research Group, London School of
Economics, London.
18
Inequalities remain within pensioner population

• Older pensioners poorer
• Women have lower median net incomes than men
• Single women 141, men 164
• Women within couples 77, men 199
• Ethnic minority pensioners more likely to be poor
• 29 BME elders living below 60 median income
  compared to 19 white elders

19
What future for the 1960s baby boomers in
retirement?
20
The evidence so far

• Fewer of 1960s cohort have partnered or had
  children than previous cohorts
• Those who have partnered have experienced higher
  rates of partnership dissolution
• High rates of unemployment at early ages
• Those in work, working longer hours earlier in
  the life course
• Evidence on health mixed

21
Will the 1960s cohort be better off than their
parents? Probably, but rising inequality.

• Absolute income position at age 40
• 1931-35 1961-65 Difference
• Poor (10th P) 191 369 93
• Median (50th P) 529 1159 119
• Rich (90th P) 1040 2667 156
• Relative income position at age 40
• 1931-35 1961-65 Difference
• 10th P/ 90th P .18 .14 -22
• Gini coefficient 0.35 0.40

Note Income is household adult equivalent income
per month. P Percentile. The relative position
is calculated by 10th percentile/ 90th
percentile. Source Evandrou and Falkingahm
(2006) in Vincent, J, et al (Eds) The Futures of
Old Age, London Sage Publications.
22
1960s baby boomers at age 40 pension
membership, housing tenure and children
Source Evandrou and Falkingahm (2006) in
Vincent, J, et al (Eds) The Futures of Old Age,
London Sage Publications.
23
Basic State Pension entitlement of people born in
1960 reaching State Pension age in 2025
Source SAGEMOD, ESRC SAGE Research Group April
2006 results
24
Pension Credit claimants, people born in 1960
reaching State Pension age in 2025
Source SAGEMOD, ESRC SAGE Research Group April
2006 results
25
How long will our pension have to last?
Source GAD cohort expectation of life tables,
revised on 3 January 2006.
26
Differences in life expectancy by social class
Source Trends in Life Expectancy by Social Class
1972 - 2001,ONS Longitudinal Study, England and
Wales.
27
What we need to know more about

• Employment trajectories over the working life
• How these vary for different educational and
  occupational groups
• How these vary according to family trajectories
• Patterns of pension accrual by different groups
• Patterns of life expectancy by different groups
• Need to put together the two sides of the ageing
  coin.
• Will pension income be sufficient for needs,
  particularly long term care?

28
Further details

• Population Trends, No. 99 27-36
• Health Statistics Quarterly, No. 14 30-38
• A secure retirement for all? Older people and
  New Labour
• Chapter 8 in Hills and Stewart (2005) A more
  equal society
• Chapter in Vincent, J, et al (Eds) (2006) The
  Futures of Old Age, London Sage Publications.
• Centre for Research on Ageing
• www.ageing.soton.ac.uk
• SAGE Research Group Discussion Papers
• http//www.lse.ac.uk/collections/SAGE/documents.ht
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