Young people to be hit hardest by UK’s ageing society, report suggests

Young people will be hit hardest by successive governments’ failure to focus on financial and societal challenges caused by an ageing population, a House of Lords report has suggested.

They will need to plan and prepare to work longer and save more from a much earlier age, the economic affairs committee said.

The report also found that the crisis in adult social care “remains a scandal” which needs to be addressed urgently.

Committee chair Lord Wood of Anfield told the BBC it was a “struggle to find where in government” there was a focus on ageing and the “transformational effects” it was going to have on people.

“Ageing is something that we’re just watching happening”, he told BBC Radio 4’s Today programme, adding: “We know that adaptation is the way forward”.

Policies governments have used to address the impact of declining fertility and rising life expectancy in the UK – raising the state pension age or increasing immigration for example – were not adequate solutions on their own, the report said.

Getting more people in their 50s and 60s to stay in or return to work “is key”, the committee said, and the government must prioritise incentives to do so.

It also said an ageing population will need more care workers, leaving fewer workers for other parts of the economy.

There is “widespread ignorance” of how much it costs to retire, it said, and the government should consider an education campaign – as well as finding out if the UK’s financial services sector is equipped to provide for the population as it ages.

Lord Wood said that the government and financial services industry needs to devise “more innovative ways of getting younger people to think about lives frankly they can’t conceive of at the moment – when they’re in their eighties and early nineties.”

“There’s a long time for them to be financially planning for at a time when we know young people are doing less financial planning,” he added.

“Raising the state pension age, which saves the government money, but increases pensioner poverty as many people have already stopped working by their sixties, is a red herring.

“To successfully confront this challenge, the approach to financial management of today’s and tomorrow’s young people will need to change.”