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Home Finance Lower birth rates fuel state pension headache

Lower birth rates fuel state pension headache

by Uma
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  • There were 624,828 live births in 2021. This is higher than the 613,936 registered in 2020 but among the lowest figures since the early 2000s.
  • In the post-war era live births were well over 700,000 per year. In 1947 they were over 880,000.
  • We also saw large increases in the 1960s.
  • The birth rate combined with increasing longevity has huge consequences for state pension policy.
  • The triple lock debate continues to rage in the UK as many people believe it is intergenerationally unfair.
  • In France there are strikes today over plans to increase retirement age.

The ONS has released data on births in England and Wales https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/livebirths/datasets/birthsummarytables

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown:

“Today’s birth rate data shows little evidence of the much talked about pandemic baby boom and alongside increasing longevity shows the fine line that needs to be tread on state pension policy.  Birth rates shift over time – we saw birth rates well in excess of 700,000 and even 800,000 per year in the 1960s and the post war era but the trend is recent years is downwards.

With the number of older people continuing to rise there is a real imbalance when it comes to younger people in the workforce supporting a burgeoning ageing population and the sums don’t add up. The debate continues to rage around the triple lock and whether it’s the fairest way to uprate state pension here in the UK and we await the findings of a government review into whether state pension age will be hiked further and faster. It’s not just an issue for the UK either, in France we are seeing strike action today over government plans to increase retirement age from 62 to 64 and we’ve seen retirement ages increased throughout Europe.

In the UK auto-enrolment will help more people build a pension to see them through their retirement but with state pension forming the backbone of people’s retirement income people need more certainty around when and how they get their state pension so they can plan. The time has come for a thorough review of state pension to give people a longer-term view so they can make these plans.”