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Unintended consequences
30 Jan, 2019

Less immigration means a later pension age

Migration has sustained the UK's old age dependency ratio. Without new immigration to boost the proportion of working age adults we must expect further changes to the pension age. Author of this article Janette Hurles works in Executive Coaching and Leadership Development. She is currently researching how companies are addressing the challenges of the demographic time bomb in terms of attracting and retaining older workers.


Our vastly improved life expectancy was one of the great achievements of the last century, It is now, however, the source of one of our biggest challenges in the 21stcentury. The UK is sitting on a ticking demographic timebomb which, regardless of how we voted in the 2016 referendum, is a sobering fact that should make us all pause and reflect on where we are headed as a country.  In 2014 the average age in the UK exceeded 40 for the first time. By 2020 (next year!) one third of the workforce and half the total adult population will be over 50. By 2040 nearly one in 7 Britons will be over 75. There are currently 11m people aged 65 plus in the UK and this is expected to grow to 19m by 2050. By contrast, in 2017, the birth rate fell for the fifth consecutive year.

According to David Willets, Executive Chairman of the Resolution Foundation “This decade marks the turning point in a transition to an aging population in which the population of people aged 65 is set to grow faster than those of working age. Whilst the UK population has steadily risen over the past 50 years, it is the balance within society between the young (those aged under 20), the old (those aged 65 plus) and those of working age (those aged 20 to 64)  - on whom the remainder are largely dependent – which is set to change most dramatically

This shift in the UK age profile has huge implications for all aspects of our society and economy. As the baby boomer generation enter retirement, the ratio of non-workers to workers is rising. It is estimated that by 2022, 14.4 million more jobs will be created but only 7.5 m younger workers will enter the workforce. We are already seeing rises in the state pension age and according to the Oxford Institute for Population Ageing, further delays to pension payments will be necessary if current levels of immigration, which have sustained the country’s old age dependency ratio, are not maintained. We are staring blindly in to a pensions black hole; 2 in 3 UK pension schemes are in the red and around 61% of defined benefit company schemes have more money going out than coming in which is clearly not sustainable. Who will pay in to our pension schemes if we don’t encourage young people to migrate here? Who will pay taxes?

Now more than ever, there is a pressing need to attract young people to our country to address our home age imbalance. However, many potential immigrants are likely to find their entry to the UK blocked post BREXIT, reducing the number of foreign workers available to fill vital roles in our NHS and Social Care systems. Currently 1 in 20 social care workers are EEA migrants. They do the bulk of caring for our elderly in care homes. In London, 11% of the social care workforce are EEA migrants. These workers would not meet the £30,000 a year salary cut off currently being proposed. Who will care for us as we age if we don’t encourage low skilled workers to migrate here?

EU migrants have long been attracted to the UK as a good place to live and work. However, Madeleine Sumption, Director of the Migration Observatory at Oxford University has stated that “the UK has clearly become a less attractive country for EU migrants since the referendum”. Statistics suggest a sharp downturn in net migration from Central and Eastern Europe and the Polish Prime Minister wants his people back to help grow a strong Polish economy. It would appear that many are concluding that the time has come to leave the UK.

The Law of Unintended Consequences states that the actions of people – and especially governments – always have effects that are unanticipated or unintended. Professor Sarah Harper, Director of the Oxford Institute for Population Ageing , highlights one such unintended consequence of the vote to leave  “The message from BREXIT is if you don’t want immigrants, you are going to have to work longer. That’s how the sums work.”



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