Population projections & dependency ratios
Last week saw the publication of a set of population projections from the Office for National Statistics.
This was the release of the ONS 2014-based national population projections.
The data replaces the 2012-based projections the ONS published two years earlier and were based on the UK population as at June 2014, the most recently available mid-year population estimates.
For someone who enjoys forecasting and predictions, this publication is like Christmas come early.
It actually makes projections all the way out to the year 2114, when I hope to celebrate my 135th birthday, but the ONS points out that such long-range projections “should be treated with caution in view of the increased uncertainty on demographic behaviour that far in the future”.
What the shorter-term projections show is that the UK population is projected to increase by 4.4 million over the next decade.
It is projected to rise from a total of 64.6 million people in 2014 to 69.0 million at mid-2024.
This is an increase of 6.9% of the 2014 population and it’s equivalent to an average annual growth rate of 0.7% each year over the decade.
Looking slightly further into the future, the UK population is predicted to increase to 74.3 million by mid-2039, with an annual average growth rate of 0.6%.
In case you were interested in this particular milestone, it is projected by the ONS that the population of the UK will reach 70 million by mid-2027.
Part of this projected increase is due to projected natural change and part (just over half) is due to projected net migration.
Digging a little deeper into the projections, we get to the dependency ratio. This is the ratio of people of retirement age and over to working age people.
The ONS project that the number of working age people available to support each retirement age person will change over time.
In 2014 there were on average 310 people of retirement age for every 1,000 working age people.
By 2039 this is projected to increase to 370 people of retirement age for every 1,000 working age people.
The ONS point out that this has implications for the affordability of pensions as fewer workers are available to contribute to pay for state pensions via national insurance and taxes.
This ageing population and higher proportion of people of retirement age will have implications for our approach to financial planning, as well as care needs in later retirement and the impact on the NHS.
As we live longer lives and potentially receive less financial support from the state, it will be important to make greater provision for the future and take more responsibility for our own financial security in later life.