People living longer lives combined with fewer children being born means that the UK population is ageing. This means that there is likely to be a growing number of pensioners compared to those of working age. Sarah Crofts considers what this means for the UK population, old-age dependency and the role of international migration.
The growing number of pensioners compared to those of working age raises lots of questions. Does this mean that we need more workers to help pay for state pensions and the services that older people are more likely to need? Where will these workers come from? Does immigration play a role?
The traditional method
A widely used measure to compare the numbers of people above State Pension Age (SPA) to the numbers of people aged 16 up to SPA is the Old Age Dependency Ratio (OADR). Over time, the OADR has been increasing, meaning that older people are making up an increasing part of the population. One way to reduce the OADR is to boost the numbers of people below SPA through immigration. However, higher levels of net migration will slow population ageing but will not prevent it.
See it for yourself in our interactive tool where you can try out your own scenarios
A limited impact
If immigrants remain then they too will eventually contribute to the older population, but not initially. Immigrants are usually of working age and tend to have more children than UK nationals. Over time they will also reach SPA and subsequent generations tend to have fewer children. Therefore, higher levels of long-term immigration will simply postpone population ageing, but by how much? If we look at possible future migration scenarios, the OADR will increase at twice the pace if there is zero net migration compared to a continued high net migration level of 245,000 per year. However, changes in SPA and increases in the numbers of older workers have more of an impact on population ageing compared with international migration.
Does OADR give a realistic view?
People are working for longer. This is because of a range of factors including changes in the SPA, greater choices in working arrangements and the removal of compulsory retirement. The growth seen in employment of people aged over 50 (and particularly those aged over 65) has outpaced the growth of any other age group. Around half of people working beyond SPA are not ready to stop working and for others, the reasons are varied (see our previous report here). Therefore, the OADR (which is based on SPA alone) does not give a realistic view of the numbers of workers compared with the number of people who do not work.
An alternative approach
Today, we have also published an article Living Longer and old age dependency – what does the future hold? that considers an alternative approach to measuring population ageing and economic activity. This alternative approach, which we have named the Active Dependency Ratio (ADR), looks at how the numbers of economically inactive people in the population compares to the numbers of economically active.
It shows that despite an ageing population, the proportion of economically active people has been increasing, with women in their 50s and early 60s contributing to a substantial share of that growth. However, despite the recent increased economic activity at older ages, when we look to the future there is a projected increase in the proportion of economically inactive compared to the economically active population, although at a slower rate than the OADR. International migration will slow down the effects of population ageing, but the migration scenarios which we have considered have less of an effect on potential old-age economic dependency compared to the projected future growth in older workers.
Finding out more about population ageing and migration
If you would like to find out more about our Living Longer series, including an overview of how our population is changing and why it matters, please visit https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/ageing/articles/livinglongerhowourpopulationischangingandwhyitmatters/2018-08-13
Last week we published an update on our progress towards transforming population and migration statistics. This included a review of user needs based on the feedback we received following our report in January, the latest on our research into producing administrative data based population estimates and the coherence of our existing survey sources on migration
 Employed people and unemployed people who are actively seeking work in the past 4 weeks and are available to start work in the next 2 weeks are classed as economically active.
Sarah Crofts is Head of the ONS Centre for Ageing and Demography