As a nation, we’re all getting older. More pensioners and fewer of working age place will place serious financial demands on society.
In some parts of the country, we have already seen an explosion in the elderly population.
Christchurch in Dorset is a good example, where the median age is 69.8 years old and 31% of those living in the district are over age 65.
Eastbourne has an average age of 71.1.
This retirement boom is just getting started, with the post-war Baby Boomer generation only recently starting to enter retirement. Over the next 20 years, expect many local authorities to buckle under the financial strains of supporting an elderly population.
Watch our feature-length documentary about the retiring Baby Boomer generation
One think tank has come up with a radical set of proposals to tackle these challenges.
The Institute of Economic Affairs, a rather right leaning organisation, believes the solution lies in cutting the proposed flat-rate state pension in half and lowering National Insurance contributions.
Instead of receiving £155 per week in state pension, the proposals would result in a payment of just £75 a week.
Those in employment would receive a National Insurance rebate based on their age, with a 40 year old saving around £3,000 a year.
The thinking behind these proposals is that the tax savings would be diverted to private pension savings, accessible from age 55 with a great degree of flexibility after government proposals are introduced next April.
Boosting the amount being saved in private pensions is essential if we are to avoid a catastrophe in retirement income levels in the future.
Getting there by slashing state pension levels for pensioners today seems inappropriate, particularly when the biggest financial challenge stemming from an ageing population seems likely to be adult social care rather than the state pension bill.
What the government could do to build confidence in private pensions and encourage greater personal responsibility is to stop tinkering with the pension system.
We have long advocated the introduction of an independent pension policy committee, with power to legislate for pension policy in the long-term, rather than making politically motivated decisions in a crass attempt to win votes.
