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The cost of our ageing society

Populations are ageing in countries across the world and, as a result, the proportions of older people relative to working-age people are growing. In the UK: the old-age dependency ratio is expected to rise from 28% to 47% (from around four working-age people for every person aged 65 and over to around two working-age people for every person aged 65 and over) between 2010 and 2060. In the EU: the old-age dependency ratio is expected to rise from 28% to 58% (from around four working-age people for every person aged 65 and over to under two working-age people for every person aged 65 and over) between 2010 and 2060. Globally: Between 2011 and 2060 the old-age dependency ratio is expected to rise from 16% to 42% (from more than six working-age people for every person aged 65 and over to just over two working-age people for every person aged 65 and over).

Shifts in the proportion of older people to working-age people have ramifications for state spending on pensions, health care, long-term care and unemployment benefits.In order to attempt to summarise the global costs of ageing, this briefing reviews current global projections of the cost of ageing over the next few decades, drawing on the European Commission‟s 2012 Ageing Report8 and the Office for Budget Responsibility‟s Fiscal Sustainability Report, July 2012.

Firstly we look at macro factors impacting the costs of ageing, then projected costs of ageing society including age-related expenditure and finally conclusions and policy recommendations. An online survey conducted by ILC-UK, in conjunction with Milliman LLP, is also included in the Appendix.

Whilst this report focuses on the fiscal cost of an ageing society, it is important that governments recognise the contribution that older people make to society and the economy when considering policy interventions: Older people have a wealth of skills and experience to offer society and the labour market. Labour market participation at older ages is on the rise, many older people not in work contribute to society through unpaid caring and volunteering (carers of all ages contribute the equivalent of £119 billion every year in the UK),10 and older consumers (aged 65 and over) spend on average, around £100bn per year.