Majority unwilling to cover costs of ageing population

The majority of Britons expect to retire later in life, but they are
unwilling to pay for the rising costs of an ageing population, according to a
new report.

A survey of nearly 3,000 people, by consultants Watson Wyatt and market
researchers YouGov, found that while the majority understand UK demographic
trends, less than one in five is willing to pay more than 2 per cent extra in
tax or National Insurance to fund the costs of an ageing society. An additional
expenditure of an estimated 4.5 per cent of gross domestic product (GDP) is
likely to be required simply to maintain current living standards for the
elderly.

The survey also found that more than 50 per cent of the respondents expect
that ‘significantly more’ people will have to work to later ages in the future,
while a further 38 per cent expect ‘slightly more’ people to have to work
later. Less than 7 per cent believe fewer people will end up retiring later.

The UK population will age significantly over the next 20 years. Currently,
people aged over 60 make up about 21 per cent of the total population. And
according to United Nations population projections, this number will rise to 28
per cent in 2023 and will reach 33 per cent by 2033.

Watson Wyatt’s analysis of the survey results found that those expecting
little in the way of retirement income from the state were the least willing to
pay more in tax and national insurance to ensure the standard of living for
pensioners is maintained. Those who are out of the labour market, older
individuals and those anticipating longer life expectancies, are willing to pay
more.

"It appears that individual responses are based, to a large extent, on
what is in their personal self-interest," said Jonathan Gardner.

"Those who will gain the least from higher benefits because they expect
to rely mainly on private savings in retirement are the least likely to be
willing to pay more taxes to pay for the elderly. Those out of the labour
market who will gain the most from state subsidies are clearly most in support
of higher taxes to pay for the elderly."

By Quentin Reade

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