Advice in an ageing society - Money marketing conference

The International Longevity Centre-UK is an independent, non-partisan think-tank

dedicated to addressing issues of longevity, ageing and population change.

Advice in an ageing society

David Sinclair, International Longevity

Centre – UK @ilcuk @sinclairda



ILC-UK Planning Tomorrow, Today

think tank evidence based policy focussed balanced independent respected experts networked international



Who are we?

The ILC-UK was established

in 2000 to explore and

address the impact of our

ageing society on public

policy

We have a global reach with

14 Members of the ILC

Global Alliance.



Who do we work with?

http://www.housinglin.org.uk/

http://www.dh.gov.uk/health

http://www.google.co.uk/url?sa=i&rct=j&q=BT&source=images&cd=&cad=rja&docid=G-7vjkyhkckoCM&tbnid=nxYEOO791l2ijM:&ved=0CAUQjRw&url=http://www.uswitch.com/tv/news/2012/11/british_eurosport_comes_to_bt_vision/&ei=VE4SUaz_A6eW0QWizIDgAw&bvm=bv.41934586,d.d2k&psig=AFQjCNHYMZsXtv4deM-_Rd4iW5FijOtRMA&ust=1360240537348380

http://www.pfizer.co.uk/sites/uk/Pages/default.aspx

http://www.google.co.uk/url?sa=i&rct=j&q=prudential&source=images&cd=&cad=rja&docid=_50fNauR_yu1EM&tbnid=CbdObA4nbf4lAM:&ved=0CAUQjRw&url=http://www.grovelands.co.uk/rdr-crisis-as-prudential-calls-for-a-delay/&ei=uU4SUf7OFPO10QWAx4HwDA&bvm=bv.41934586,d.d2k&psig=AFQjCNEDsAHmnrUtUJrGsb0onG-GTdC0yA&ust=1360240678425765

http://www.google.co.uk/url?sa=i&rct=j&q=aviva+logo&source=images&cd=&cad=rja&docid=mnNOvtn1gnuOQM&tbnid=-TovLwRQxEAXBM:&ved=0CAUQjRw&url=http://symbolphotos.blogspot.com/2011/07/aviva-logo-photos.html&ei=504SUbJ6wqDRBfKtgZAJ&bvm=bv.41934586,d.d2k&psig=AFQjCNFnZD8euFW9hZNyBYAEXCslnzSlJg&ust=1360240740558355

http://www.google.co.uk/url?sa=i&rct=j&q=actuarial+profession&source=images&cd=&cad=rja&docid=SgmFf07sTBHMiM&tbnid=FvxL9CZiwgu4YM:&ved=0CAUQjRw&url=http://www.maths.manchester.ac.uk/undergraduate/careers/cc/company%20profiles.php&ei=N08SUdzRN_GX0QW6yIC4Cg&bvm=bv.41934586,d.d2k&psig=AFQjCNFvZ9NEnjQQaQ0NPMrjBhCP5ZXiEQ&ust=1360240805691645

http://www.google.co.uk/url?sa=i&rct=j&q=friends+provident+foundation+logo&source=images&cd=&cad=rja&docid=7-2EYM1PWL3_fM&tbnid=Uoa1KC9wC4fCWM:&ved=0CAUQjRw&url=https://www.friendslife.co.uk/common/layouts/subSectionLayout.jhtml?pageId=fpcouk/SitePageSimple:friends_provident_foundation_landing+_page&ei=uk8SUavEHsrK0QWd4IHgBQ&bvm=bv.41934586,d.d2k&psig=AFQjCNHkPV5CaVKeRIWDHZlUJH4UG-emxg&ust=1360240948046716

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=fGMTW4IGtg9aMM&tbnid=7_EIOMXkw3TgWM:&ved=0CAUQjRw&url=http://en.wikipedia.org/wiki/File:Esrc_logo.png&ei=ZeoUUf_aGaqV0QWukICADA&bvm=bv.42080656,d.d2k&psig=AFQjCNF_AgbEBk2dpEod6kh_DOGWjyBVgQ&ust=1360411606208461



Our focus is broad



Ageing society

– More older people

– More of the oldest old

Advice challenges

– Small pots

– RDR



Growth in the number of oldest old



How many centenarians are there?

There are currently 11,800 people in the UK who are currently at least 100 (DWP)

There are fewer than 100 people who are aged more than 110. (DWP)

In 1911 there were just 100 Centenarians living in England & Wales

Growth has been about 7% p/a http://www.flickr.com/photos/un_photo/5832685007/sizes/z/in/

photostream/



Number of people currently alive who can expect to see their 100th birthday, by age in 2010



Life is not easy for the oldest old

Three quarters of the oldest old

suffer from limiting longstanding

illnesses, and one out of three

perceive themselves as being in

poor health. (Tomassini C, 2005)

“almost 50% of men and women

aged 80-84 report severe

limitations in activities” (IFS, 2010)

http://www.flickr.com/photos/pondspider/4170990903/sizes/m/in/photostream/



And many find it difficult to do day to day tasks

Sixty per-cent of over 90s report

difficulties shopping for groceries,

almost a quarter report difficulties

making telephone calls and 35%

report difficulties managing

money. (Sinclair, 2010/ELSA)

http://www.flickr.com/photos/pinkchocolate/3039589789/sizes/

m/in/photostream/



A relatively high proportion live alone

Of those living in private households, four in ten very old men and seven out of ten very old women live alone. One out of five very old people live in communal establishments. (Tomassini C, 2005).

http://www.flickr.com/photos/sbeebe/5154169795/sizes/m/in/photostream/



Most centenarians consult their GP

98% of centenarians

and near

centenarians

consulted a GP and

received prescription

medicine during follow

up. (Roughead,

Kalisch et al, 2010)

http://www.flickr.com/photos/rwjensen/2288339230/sizes/m/in/photostream/



Centenarians do use drugs heavily

A study of 602 centenarians in Italy found that a very high proportion of this age group were users of drugs.

5% no drugs. 13% one drug a day 16% took 2 drugs per day 65% took three drugs a day 5.5% more than 3 drugs a day.



Some evidence of longer hospital stays

Centenarians who had suffered from a hip fracture between 2000 and 2007 compared to a randomly selected control group of 50 hip fracture patients aged between 75 and 85. “the mean stay in acute orthopaedic wards for centenarians was 20.7 days and for the control group was 14.9 days”.

The longer acute hospital stay in the centenarian cohort would amount to a mean extra cost of £ 2511 per patient. (Verma et al)



Depression

“23% of those aged 85 and over

had levels of depressive symptoms

indicative of clinical relevance”

“Almost 13% of men and women

aged 80 and over had high levels

of depressive symptoms in 2008-09

but not in 2002-03” (IFS, 2010)

ELSA

http://www.flickr.com/photos/junglearctic/3002442666/sizes/m/in/

photostream/



Falls

60% of interviewees aged over 90 had had a fall and that of these, 4 in five were unable to get up after at least one fall and almost a third had lain on the ground for an hour or more.

Call alarms were widely available but not used.(Fleming and Brayne, 2008; Cambridge City over 75-Cohor. BMJ)



Poverty is a very real challenge

There is evidence that the

oldest old (aged 85 and over)

are, as a group, at greater

risk of poverty than younger

older people (aged 65-85)

Up to 10% of the oldest old

have total net wealth of

£3,000 or less.



Dementia among centenarians

The prevalence of

dementia-free

survival past 100

years of age varied

between 0 and 50

percent.”

http://www.flickr.com/photos/thousandshipz/4679235/sizes/m/in/photostream/



The oldest old remain the most excluded

Almost 38% of those aged 85 or older faced some kind of social exclusion, an encouraging decline of 10% from the 2002 levels

As people age, they are more likely to become more socially excluded than less

Almost two-fifths (38%) of those aged 85 and older were excluded from two or more domains of exclusion in 2008

http://www.flickr.com/photos/pinkchocolate/3039589789/sizes/

m/in/photostream/



Quality of Life falls with age



Cost of ageing

In the UK: age-related spending is projected to rise from an annual cost of 21.3% to 26.3% of GDP between 2016/17 and 2061/62, a rise of 5% of GDP (equivalent to a rise of around £79bn in today’s money).



Healthcare costs

• In the UK: spending on health care is projected to see the largest

rise of all elements of age-related spending, rising from an annual

cost of 6.8% to 9.1% of GDP between 2016/17 and 2061/62, a rise of

2.3% of GDP (equivalent to a rise of around £36bn in today’s

money).

• In the EU: spending on health care is projected to rise from an

annual cost of 7.1% to 8.3% of GDP between 2010 and 2060, a rise

of 1.1% of GDP.

• Globally: it is difficult to project the costs of health care because of

the lack of data from developing countries. But evidence of growing

numbers with long term conditions.



Spending on health care will see the greatest increase of all age-related spending over the next 50 years

Projected health care spending as a proportion

of GDP



Long term care costs

• In the UK: spending on long term care is projected to rise between 2016/17 and 2061/62 from an annual cost of 1.1% to 2% of GDP, a rise of 0.9% of GDP59 (equivalent to a rise of around £14bn in today’s money).

• EU spending on long term care is projected to rise from an annual cost of 1.8% to 3.4% of GDP between 2010 and 2060



Increasingly living alone - isolation

50 per cent of the

1960s cohort will be

living alone at age 75

compared with 37 per

cent for the 1916-1920

cohort and 41 per cent

of the 1940s cohort

(Evandrou &

Falkingham, 2000).



Many live independently

Substantial numbers of centenarians and nonagenarians continue to live independently in the community, either alone or with family members.

8% of those aged 90 and over were living in privately rented accommodation and 30% in socially rented accommodation. 2009 Understanding Society



Living together is good for us

Those who moved from living alone to living as part of a couple (with no children) exhibited a 68% fall in the odds of becoming multiply excluded between 2002 and 2008 compared to those who stayed living alone;

Those who moved from being resident in a couple household to living alone were over three times more likely to become multiply excluded. For this age group (50+), becoming a widow is one of the most common reasons for starting to live alone.

http://www.flickr.com/photos/anabadili/2963913137/sizes/m/in/

photostream/



Impact of the global economic downturn

EU GDP growth is expected to be 1.4% per year between

2010 and 2060 compared to 2.5% for the 10 years 1997-2006.

More difficult for the state to pay for longevity:

Employment and productivity falling; falling tax intake; more

difficult to meet debt obligations; difficulties in funding public

pension systems

And for the individual: Unemployment, reductions in wages,

or reductions in hours worked, make it more difficult to save

adequately for retirement; Falls in value of pension pots; Price

inflation has been high.



The squeezed middle age

People in their fifties increasingly excluded from society The number of people aged 50 plus

being socially excluded from decent housing, public transport and local amenities has risen sharply

Over one in six people in their fifties (18%) were socially excluded in two of more areas of their life – up from 13 per cent in 2002.



Britons ageing quicker than their parents



Will the baby boomers demand change?

“They have fewer ties to family responsibilities... With their homes paid for their major housing concern is for property taxes and repairs... Being essentially free from obligation, they may spend their income and assets as they wish. Here is a potential market, therefore for those marketers who wish to appeal to it. It is a new market, almost unrecognised which must be developed with care as it depends upon the changing role of older persons in our society and the realisation that they are more free than their predecessors in the past century.”





Dodge, 1962



Some Opportunities



Dependency is not inevitable


and a ”considerable

proportion of the

centenarians maintain a good

level of auto sufficiency for

the basic performance of the

everyday life”. (Antonini et al,

2008)

http://www.flickr.com/photos/driever/5525684658/sizes/m/in/photostream/



Some of the oldest old become more active



Prevention of ill health

Physical Activity

Smoking and alcohol consumption

Nutrition

Immunisation

A move to prevention is vital



Getting housing right

1. Extra care housing is a

home for life

2. Extra care translates

into fewer falls

3. Extra care is

associated with a lower

uptake of inpatient

hospital beds



And how can we make new housing and communities aspirational?



Working longer – a solution?

The longer that people spend in work, the longer they

have to save for retirement and the shorter their

retirement will be, relative to their working life.

A later average age of exit can also increase the

number of people in work, relative to the number who

are retired, making it easier to fund pensions,

benefits and health and care costs from current

taxes.



We are working longer

Labour market participation at older ages (ages 55 to 64) is expected to increase within the EU from around 50% to around 67% between 2010 and 2060.

The average age of exit is also projected to increase from around 62 to around 64 within the EU and from around 64 to around 65 within the UK between 2010 and 2060.



Technology limited by imagination



Fantastic developments in health

I think there’ll be a cure for cancer one day. That we never thought we’d see…and Alzheimer’s.

I would wish for a pill to cure everything…



From patient/recipient to health consumer

More confident consumers of health with raising expectations rather than patients

More tests available over the counter

Greater access to information about conditions

Expectations to health become more focused on “fix it”, prevent it, cure it?

Growth in health tourism



Developments in genetics



Artificial Intelligence entity

passes A level

Possible technology innovations to 20502010 2020 2030 2040 2050

Artificial Intelligence causes redundancies

Computer controlled hunger suppressant

Emotion control devices

Auto-pilot cars

Holographic TV

Full voice recognition PCs

Thought input mechanisms widespread

Viewers can choose film roles

Global voting on some issues

Tooth regeneration

Listing of individual DNA

Circuits made with bacteria

Bionic Olympics

Active skin makeup

Disposable phones

Digital mirrors

Face recognition doors

Smart bath

Individual pollution credits

Human memory

enhancement

Virtual holidays

Hydrogen fuel stations

Self drive cars

VR windows

Prison countries

Invisibility cloak

Self clean houses

Global ID card

Robocops

Human memory downloads

Nuclear fusion

Humanoid robots beat national football

team

Artificial brain

Brain downloads

Virtual displays

Wave energy =50% in UK



Google knows! Location Based Services



There is lots to worry about

But there are opportunities

What is the role for you?

Summary



Many thanks

David Sinclair

Head of Policy and Research

International Longevity Centre

[email protected]

02073400440

Twitter: @ilcuk and @sinclairda

mailto:[email protected]



Our focus is broad



Summary

Life expectancy continues to grow

Public policy trends

4 reasons to worry

Opportunities

6 final trends

The policy role for Independent Age?



Life expectancy is increasing

In the UK, life expectancy at birth is expected to increase by 7 years for men and 6.7 years for women between 2010 and 2060.

Within the EU, life expectancy at birth is expected to increase by 7.9 years for men and 6.5 years for women between 2010 and 2060.



And we might be underestimating

• The IMF warns that, based on past underestimations, it is possible that current global longevity projections could be underestimated.

• If longevity projections are being underestimated, this could add between 1.5% to 2% of GDP to the annual costs of pensions in countries with advanced economies by 2050



Public Policy on ageing over past 10 years

2003: Introduction of Pension Credit

2000s: Equalities Bill and Turner Commission

dominated

2000s: 2 ageing strategies under Labour and one

housing strategy



2010s: Social care funding and (since last year of

Labour Government)

Housing strategy not followed up – but greater

acceptance of importance of housing?

Growing recognition of real impact of dementia

Post election: NHS funding becoming more of

focus for reform

Post election: Government removed DRA




EU GDP growth is expected to be 1.4% per year

between 2010 and 2060 compared to 2.5% for the 10

years 1997-2006.

More difficult for the state to pay for longevity:

Employment and productivity falling; falling tax intake;

more difficult to meet debt obligations; difficulties in

funding public pension systems

And for the individual: Unemployment, reductions in

wages, or reductions in hours worked, make it more

difficult to save adequately for retirement; Falls in value

of pension pots; Price inflation has been high.



Increasing debates on the cost and contribution of

older people

Rights and responsibilities across the life-course

But public debate ill informed (my mum)

From older drivers to older workers, popular

perceptions of old age remain too negative



Quality issues a real concern (and have been for years).

Reformed/merged regulators “Bonfire of the quangos” Huge challenges in CQC Terrible examples of abuse Media focus on poor quality Liverpool Care Pathway Is quality improving? Challenging the media?

But how can health/care be improved with no cash, more demand and limited incentvies to innovation.



Initial themes of current Government

Localism

Big Society

Open Government/Data transparency



The devil is in the detail

Impact of RDR

Pensions regulations (pot follows member)

Equality regulations on goods and services/access

to health

Liverpool Care Pathway



4 reasons to worry– Oldest old– The cost of ageing– Isolation and exclusion– The squeezed middle aged

But opportunities– Prevention (Vaccination nutrition pa)– Housing– Working longer– Health developments and new technology

Why should we worry?



Growth in the number of oldest old



How many centenarians are there?

There are currently 11,800 people in the UK who are currently at least 100 (DWP)

There are fewer than 100 people who are aged more than 110. (DWP)

In 1911 there were just 100 Centenarians living in England & Wales

Growth 7% p/a



Life is not easy for the oldest old

Three quarters of the oldest old suffer from limiting longstanding illnesses, and one out of three perceive themselves as being in poor health.

“almost 50% of men and women aged 80-84 report severe limitations in activities” (IFS, 2010)

Sixty per-cent of over 90s report difficulties shopping for groceries, and 35% report difficulties managing money.

http://www.flickr.com/photos/pondspider/

4170990903/sizes/m/in/photostream/



Health of the oldest old

A very high proportion of centenarians use drugs

Some evidence of longer hospital stays

23% of those aged 85 and over had levels of clinical depressive symptoms 60% of interviewees aged over 90 had had a fall and that of these, 4 in five were unable to get up after at least one fall

Dementia between 50% and 100% 98% of centenarians and near

centenarians consulted a GP



Poverty is a very real challenge

The oldest old (aged 85

and over) are, as a group,

at greater risk of poverty

than younger older people

(aged 65-85). Up to 10%

of the oldest old have total

net wealth of £3,000 or

less.



OAP recovering after getting trapped in bath for 5 days



Cost of ageing




Trends in healthcare

As a result of a growing older

population, increasing longevity and a

greater coverage of public health care

within the EU the pressure on public

health care funding is likely to continue

growing. Public health spending in the

EU currently accounts for 14.6% of total

government spending, around 7.1% of

GDP.



Healthcare costs





money).



of 1.1% of GDP.







Projected health care spending as a

proportion of GDP



Pension costs

• UK spending on public pensions (state

pension, pensioner benefits and public

service pensions) is projected to rise

from an annual cost of 8.9% to 10.8%

of GDP between 2016/17 and 2061/62

(equivalent to a rise of £33bn in

today’s money). These assumptions

do not include consideration of the

impact of a single-tier pension.



Increasingly living alone - isolation

50 per cent of the

1960s cohort will be

living alone at age 75

compared with 37 per

cent for the 1916-1920

cohort and 41 per cent

of the 1940s cohort

(Evandrou &

Falkingham, 2000).






http://www.flickr.com/

photos/anabadili/2963913137/sizes/m/in/photostream/



Exclusion from Cultural Activities



Exclusion from Local Amenities



Exclusion from Decent Housing and Public Transport



Exclusion from common consumer goods



Access to banking

Almost ten per cent of older people do not have a current account

Among older people surveyed in 2002 and 2008, fifteen per cent of older people did not report having a current account at both points.

Six per cent of older people who reported a current account in 2002 no longer did so in 2008.




People in their fifties increasingly excluded from society The number of people aged 50

plus being socially excluded from decent housing, public transport and local amenities has risen sharply




Britons ageing quicker than their parents





Dodge, 1962



Convenient myth of the elderly hedonist

The elderly have had a recent makeover, as appears in the 70-is-the-new-50 cliche….The impression is one of elderly hedonists – more people in their 60s are getting divorced and starting a new life; line-dancing, gymnastics and dating agencies, going from holiday to holiday; concessions, free passes and cheap tickets. The OAP of yesterday has been transformed into the swinger who refuses to acknowledge ageing.

In other words, the high-profile, fun-loving elderly consumer has become the contemporary emblem of old age. This is profoundly reassuring for the rest of us, and it conveniently dissimulates the image of those who live on into their ninth and 10th decade, consigned to the low-watt penumbra of the nursing home, or worse, the invisible "shut-ins", as they are sometimes called, those too timid to go out, who have lost confidence on the uneven pavements and dizzying shopping crowds; those afflicted by the mysterious paranoias of old age, trembling each time the doorbell rings and frightened of the unexpected telephone call; people whose days are marked by boredom and its twin, loneliness; the companionless meal, the ticking clock and the sound of the electricity meter in the stillness, while the winter dark presses against the windows by 4pm, the only company the school photograph of grandchildren with their cheeky smiles and lost milk teeth smiling against the blue background of a painted summer sky.

Jeremy Seabrook http://www.guardian.co.uk/commentisfree/2010/jan/12/elderly-care-michael-parkinson



Some Opportunities




Dependency is not

inevitable and a

”considerable proportion of

the centenarians maintain

a good level of auto

sufficiency for the basic

performance of the

everyday life”. (Antonini et

al, 2008)

http://www.flickr.com/photos/driever/5525684658/sizes/m/in/photostream/



Some of the oldest old become more active



Prevention of ill health

Physical Activity

Smoking and alcohol consumption

Nutrition

Immunisation

(NUDGE, COMPEL OR EDUCATE?)

A move to prevention is vital



Getting housing right

1. Extra care housing is

a home for life

2. Extra care translates

into fewer falls

3. Extra care is

associated with a

lower uptake of

inpatient hospital

beds



And how can we make new housing and communities aspirational?



Dependency ratios are increasing (by 2060)

From around

four working-

age people to

around two

working-age

people for every

person aged 65

(UK)











taxes.



Technology limited by imagination



Fantastic developments in health

I think there’ll be a cure for cancer one day. That we never thought we’d see…and Alzheimer’s.

I would wish for a pill to cure everything…



A significant association between internet use and perceived control in one’s life

Uses the internet

Yes

No

Total

Strongly agree 551 (39.6%) 840 (60.4%) 1391

Moderately agree 1515 (51.6%) 1420 (48.4%) 2935

Slightly agree 1545 (59.4%) 1058 (40.6%) 2603

Slightly disagree 636 (68.2%) 296 (31.8%) 932

Moderately disagree

593 (77.3%) 174 (22.7%) 767

Strongly disagree 268 (71.8%) 105 (28.2%) 373

Chi-Sq= 422.074, df = 5, P=<0.000

Table 1. Feels what happens in life is often determined by factors beyond control



A strong association between the measure of internet use and measures of loneliness

Uses the internet

Yes

No

Total

Hardly ever or never

3764 (60.2%) 2489 (39.8%) 6253

Some of the time 1091(51.3%) 1037 (48.7%) 2128

Often 272 (37.4%) 456 (62.6%) 728

Chi-Sq= 166.556, df = 2, P=<0.000Table 5. How often respondent feels lonely



People who reported not using the internet were more likely to say that they ‘often’ felt isolated Uses the internet

Yes

No

Total

Hardly ever or never

3683 (59.5%) 2503 (40.5%) 6186

Some of the time 1242 (52.6%) 1118 (47.4%) 2360

Often 198 (37.4%) 331 (62.6%) 529

Chi-Sq= 115.871, df = 2, P=<0.000Table 6. How often respondent feels isolated from others



We must recognise and maximise the contribution of age

• Labour market participation

at older ages is on the rise.• Carers of all ages contribute

the equivalent of £119 billion

every year in the UK. • Older consumers (aged 65

and over) spend on average,

around £100bn per year.• Older people volunteer.



6 other trends to think about

Urbanisation: In the developing world the share of older persons residing in urban areas will rise from about 56 million in 1998 to over 908 million by 2050

The care workforce (role for older people?) Challenges of migration Climate change/environmental change Dementia Affluenza (Debt/Obesity) A growing culture of “othering” (fear of crime)



The policy role for Independent Age?

Housing; Care and advice; Isolation and exclusion

Look forward

Focus on the oldest old and most excluded OR

prevention value of early intervention

Challenge stereotypes and ageism

Explore diversity (men; migration)

Challenge existing thinking

Challenge older people (ask difficult questions)



Many thanks

David Sinclair

Assistant Director, Policy & Communications

International Longevity Centre

[email protected]

02073400440

Twitter: @ilcuk and @sinclairda




The cost of our ageing society

European Commission 2012 Ageing Report

Office for Budget Responsibility: Fiscal Sustainability Report, July 2012.



Dependency ratios are increasing (by 2060)

From around four working-age

people to around two working-

age people for every person

aged 65 (UK)

From more than six working-age

people for every person aged 65

and over to just over two

working-age people for every

person aged 65 and over

(Globally)



Relatively fewer ‘working age’ adults (EU)

The greater the old-age dependency ratio, the more pressure there is on state systems to fund pensions, benefits, and health and care costs for older people.

0%

20%

40%

60%

80%

100%

2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060

Children Working-age Age 65 and over



The challenge in some places is more severe

0

10

20

30

40

50

60

70

80IE UK

NO

DK

BE

LU SE

FR

NL FI

CY

EU

15 AT

EU

27E

A17 CZ

EE

MT

ES

GR IT LT PT SI

HU

DE

BG

EU

12 SK PL

RO LV

2010 2010-2030 2030-2060

Old-age dependency ratio (65+ / 15-64)



Cost of ageing




Pension costs

• UK spending on public pensions (state pension,

pensioner benefits and public service pensions) is

projected to rise from an annual cost of 8.9% to 10.8%

of GDP between 2016/17 and 2061/62 (equivalent to

a rise of £33bn in today’s money). These

assumptions do not include consideration of the impact

of a single-tier pension. • EU spending on public pensions is projected to rise

from an annual cost of 11.3% of GDP to 12.9% of GDP

(2010 to 2060).• Globally: IMF project that global spending on pensions

could rise from an annual cost of 5.3% to 11.1% of

GDP between 2010 and 2050 in advanced economies.



UK spending on pensions as a proportion of GDP to rise to 10.8% by 2062

0%

2%

4%

6%

8%

10%

12%

2016-17 2021-22 2031-32 2041-42 2051-52 2060-61 2061-62

State Pensions Pensioner Benefits Public Service Pensions



Progress with pension reforms: spending

-4

-2

0

2

4

6

8

10

12

14

16LV PL EE IT D

K PT FR SE EL BG UK

EU27 EA AT D

E CZ HU FI LT NL ES RO IE N

O SK MT BE SI CY LU

2009 AR 2012 AR

+1.5 p.p. (2012 AR)

+2,3 p.p. (2009 AR)



Healthcare costs





money).



of 1.1% of GDP.







Projected health care spending as a

proportion of GDP



Spending on long-term care

Projected spending on long-term care as a proportion of GDP



Cost of education flat

• In the UK: spending on education is projected to remain generally level between 2016/17 and 2061/62 at an annual cost of 4.5% of GDP. (NB Partly due to spending cuts in education announced in November 2011)

• In the EU: spending on education is projected to reduce from an annual cost of 4.6% to 4.5% of GDP between 2010 and 2060



Costs of unemployment up in UK

In the UK: spending on unemployment benefits is projected to rise from an annual cost of 0.3% to 0.6% of GDP between 2010 and 2060 (equivalent to a rise of around £5bn in today’s money).

• In the EU: spending on unemployment benefits is projected to reduce from an annual cost of 1.1% to 0.7% of GDP between 2010 and 2060. Partly due to European Commission expectation that there will be a decrease in the structural unemployment rate.



Looking forward

Changes in longevity, fertility and migration

Trends in health care and long-term care

Labour market participation rates and labour market exit ages

The economy and GDP growth



Changes in longevity

Longevity is expected to continue increasing: Increasingly long lives impact the costs of pensions, health care and long-term care as individuals need to receive these benefits and services for longer.

Globally, life expectancy at birth is projected to increase by 13 years during this century from 68 years in 2005/10 to 81 years in 2095/2100.



Life expectancy is increasing

In the UK, life expectancy at birth is expected to increase by 7 years for men and 6.7 years for women between 2010 and 2060.

Within the EU, life expectancy at birth is expected to increase by 7.9 years for men and 6.5 years for women between 2010 and 2060.



And we might be underestimating

The projected costs of ageing will be higher if people live for longer than current longevity projections indicate.

• The IMF warns that, based on past underestimations, it is possible that current global longevity projections could be underestimated.

• If longevity projections are being underestimated, this could add between 1.5% to 2% of GDP to the annual costs of pensions in countries with advanced economies by 2050



Fertility rates are below replacement rate

• Fertility rates are increasing but are still lower than

a 100% replacement rate of 2.1 births per woman

per lifetime in the EU and the UK

• A reduction in fertility relative to the rest of the

population has implications for future proportions of

working-age people to older people.

• Global fertility rates are currently at 2.47 births per

woman.

• The UK has a fertility rate higher than the EU

average, at 1.94 in 2010, which is projected to fall

to 1.91 by 2060




EU GDP growth is expected to be 1.4% per year between 2010 and

2060 compared to 2.5% for the 10 years 1997-2006.

More difficult for the state to pay for longevity: Employment and

productivity falling; falling tax intake; more difficult to meet debt

obligations; difficulties in funding public pension systems

And for the individual: Unemployment, reductions in wages, or

reductions in hours worked, make it more difficult to save adequately

for retirement; Falls in value of pension pots; The value of a pension

annuity has decreased; Price inflation has been high, especially for

pensioners who spend the majority of their income on basic goods and

services (eg food and energy) which experience greater inflation.



Potential growth rates decline

Productivity (+1.5 %) becomes the dominant source of

growth

0.0

0.5

1.0

1.5

2.0

2.5

3.0

200

4

200

6

200

8

201

0

201

2

201

4

201

6

201

8

202

0

202

2

202

4

202

6

202

8

203

0

203

2

203

4

203

6

203

8

204

0

204

2

204

4

204

6

204

8

205

0

205

2

205

4

205

6

205

8

206

0

2009 AR 2012 AR

Potential GDP growth - EU27



Trends in healthcare

As a result of a growing older

population, increasing longevity and a

greater coverage of public health care

within the EU the pressure on public

health care funding is likely to continue

growing. Public health spending in the

EU currently accounts for 14.6% of total

government spending, around 7.1% of

GDP.











taxes.



Ageing or retirement problem ? Adult life spent in retirement EU27

2010 2060 2010 2060

54.5 66.7 38.6 60.3

21.6 21.6 23.6 23.6

62.5 64.3 61.7 63.8

18.9 22.7 22.7 26.0

31.7 34.7 37.4 39.3

2.0 1.3

Requested exit postponement in years(to keep % life spent in retirementconstant)

Men Women

Average entry age

Employment rate of older workers (55-64)

Average exit age

Life expectancy at the time of w ithdrawal

% of adult life spent in retirement



Must address worklessness across lifecourse

• A low old-age dependency ratio does not necessarily mean

that the burden on working people is reduced unless many of

the people of working-age are actually in work

• Another way of measuring the degree of dependency in a country

is by looking at proportion of people who are not in work as a

proportion of the total population. (Labour Market Adjusted Ratios)

• In the UK 42.6% of the population were not in work in 2010. This

is expected to increase to 47.5% by 2050. Within the EU as a

whole, the proportion of the population out of work is expected to

grow from 47.7% in 2010 to 56.3% in 2050.26



Can migration help mitigate the cost of ageing?

YES Migration affects population size and can

reduce dependency ratios (depending on age-structure of migrants)

The UK is expected to receive around 8.6m net migrants over the next 50 years

The EU is expected to receive around 60.7m net migrants over the next 50 years

BUT• The EU would require a far greater level of net

migration to maintain the current dependency ratio (an extra 11 million migrants by 2020).



What else do we need to do?

• Governments need to prepare for uncertainty• Governments need to ensure pension systems are

sustainable, allow for greater risk-sharing, and are less vulnerable to longevity risk

• Linking retirement ages to life expectancy can help protect pension system sustainability

• Across the world, people will need to continue to work longer

• Policies must focus on enabling active, healthy ageing rather than just tackling the costs of ageing




• Countries need to ensure there are safety nets for those who cannot work longer

• Governments across the world should consider how to create better conditions for health care innovation and development

• If governments were to introduce legislation restricting the inward flow of migration the dependency ratio could be increased beyond current projection levels

• Addressing the needs of ageing populations will require ongoing investment in research and data collection




• Efforts need to be put in to tackle unemployment amongst those of working age. People in particular groups such as women and people at risk of social exclusion are more likely to be unemployed.

• Governments might wish to look at ways of helping women with children to be able to remain in the workforce, through development of child-care programmes and work with employers to ensure fathers can contribute more to raising children and women are not penalised for taking career breaks.



We must recognise and maximise the contribution of age

• Labour market participation

at older ages is on the rise.• Carers of all ages contribute

the equivalent of £119 billion

every year in the UK) • Older consumers (aged 65

and over) spend on average,

around £100bn per year.• Older people volunteer



We can tackle the challenges of the

cost of ageing

But is there the political and social

will?



Multiple issues, multiple solutionsDavid Sinclair, International Longevity Centre

– UK @sinclairda @ilcuk



Summary

Dr Dylan Kneale Using data from English

Longitudinal Study of Ageing What is Social Exclusion and

why are older people at risk How has exclusion changed

2002-2008 Who is most likely to be

excluded Trends and key findings Recommendations



What is social exclusion?

• Broadest sense Recognition of

material/non-material link

• No, Arguably apolitical with a rich academic

history

• UN, Europe…UK?



Social ExclusionDecent

Housing and Public

TransportCivic

Activities and Access to

information

Local Amenitie

s

Consumer goods

Cultural Activities

Social Relation

ships

Financial Products



Why might older people be at risk from exclusion?/multiple exclusion

characteristics that are more likely to occur in later life, such as disability, low income and widowhood

cumulative disadvantage, where cohorts become more unequal over time

community characteristics which make older people more vulnerable e.g. population turnover, economic decline and crime

experience of age-based discrimination. (based on Philipson and Scharf, 2004)

http://www.flickr.com/photos/driever/




Exclusion from Social Relationships



Exclusion from Cultural Activities



Exclusion from Civic Activities/Access to Information



Exclusion from Local Amenities



Exclusion from Decent Housing and Public Transport



Exclusion from common consumer goods



Exclusion from financial products



Access to banking

Almost ten per cent of older people do not have a current account

Among older people surveyed in 2002 and 2008, fifteen per cent of older people did not report having a current account at both points.

Six per cent of older people who reported a current account in 2002 no longer did so in 2008.



Exclusion grows for oldest old and ethnic minorities

Between 2002 and 2008, 9.3 per cent of people aged 80 plus became excluded from financial products compared to only 2.1 per cent of those aged 50-59.

Older people from ethnic minorities were more likely to be excluded from financial products.

In 2008, the odds of an older person from an ethnic minority being excluded from financial products were three times higher than the odds of a white older person.

http://www.flickr.com/photos/pondspider/




So how has exclusion changed?



And what about multiple exclusion



Exclusion isn’t inevitable by age



What about those not excluded?



Who is most likely to be excluded?

Older men were significantly more likely to be excluded from social relationships while older women were more likely to be excluded from cultural activities.

Being non-white was associated with a higher risk of experiencing some form of exclusion compared to being white (59.8% compared to 47.3%).

http://www.flickr.com/photos/driever/5525684658/sizes/m/in/

photostream/



Who is most likely to be excluded?

Wealthy older people are much less likely to be socially excluded than their poorer counterparts

Becoming a care giver between 2002 and 2008 was associated with a two fold increase in the odds of becoming excluded from two or more domains of social http://www.flickr.com/photos/sbeebe/




Other trends and key findings




Growing exclusion from housing/transport/ amenities

http://www.flickr.com/photos/thousandshipz/4679235/sizes/m/in/photostream/






http://www.flickr.com/

photos/anabadili/2963913137/sizes/m/in/

photostream/




People in their fifties increasingly excluded from society The number of people aged 50

plus being socially excluded from decent housing, public transport and local amenities has risen sharply




On the other hand – the oldest old remain the most excluded


As people age, they are more likely to become more socially excluded than less

Almost two-fifths (38%) of those aged 85 and older were excluded from two or more domains of exclusion in 2008

http://www.flickr.com/photos/pinkchocolate/3039589789/sizes/m/

in/photostream/



Growth in exclusion from housing/transport/amenities

Rates of exclusion from decent housing and public transport and exclusion from local amenities rose sharply between 2002 and 2008 among the population aged 50 and above as a whole – by over five per cent to approximately sixteen per cent.

http://www.flickr.com/photos/un_photo/5832685007/sizes/z/in/photostream/



So what needs to happen?

Allocate the task of measuring and developing strategies to overcome material and non-material disadvantage to a specific team within government.

Shift the focus of government policy on ageing towards prevention.

Develop a widowhood strategy.

http://www.flickr.com/photos/rwjensen/2288339230/sizes/m/in/photostream/



So what needs to happen?

Better develop outreach provision to reach the hardest to reach before crises occur.

Improve planning of neighbourhoods for people of all ages to reduce levels of exclusion from local amenities and decent housing and public transport.

Provide additional support for carers and reduce gender inequalities in social exclusion through the expansion of existing intervention programmes.



Contact

David Sinclair

Head of Policy and Research

International Longevity Centre – UK

[email protected]

Twitter.com/ilcuk

Twitter.com/sinclairda



Summary

About ILC-UK

The size of the market (and it’s growing)

What is an older consumer?

Is the consumer changing? Why does participation

decline with age?

Given all this, are older consumers ignored?

The issues



We influence Government policy and debate

The ILC-UK was established in 2000 to explore and address the new longevity revolution and its impact on the life-course and society.

Think Tank Global (12 ILCs) Evidence Based High visibility around Westminster (e.g. 17events/1000 people in 2010) Engage at highest levels of Government Focussed on life-course



Some of our publications

http://www.ilcuk.org.uk/record.jsp?type=publication&ID=90






It’s a big market

Older people’s

spending reached

an estimated £97bn

in 2008 (over 65)

The over 50s spent

£276bn in 2008.

This represents 44%

of the total family

spending in the UK



An ageing society means more older consumers

The 65+ age group now accounts for 20% of the UK consumer

population (16+), and is expected to rise so that in 2030 over

65s account for 25% of the consumer market. PRFC for ILC-

UK

The older market will grow by 81% from 2005 to 2030 while the

18-59 year old market will only increase by 7%. EU figures

quoted by Stewart

In the UK, the number of consumers over 60 years old could

increase by 40% over the next 30 years. Meneely, Burns and

Strugnell (2008)



Distribution of net household financial wealth1:

by age of household head (2006/08)

16-24 25-34 35-44 45-54 55-64 65-74 75-84 85+

0

20,000

40,000

60,000Mean Median



And we might buy different things

Older people currently spend more than

other ages on: drugs and healthcare;

personal care; and coffee

They represent a significant market for new

cars and travel.

Clothing spend declines with age

But less on eating out, movies, theatres,

petrol and champagne

Certain industries will need to adapt to an

ageing society



The beer industry is worried!

“German beer consumption

fell 2.1% in 2009 based on an

ageing population”

Bloomberg.com



But we know that ageing represents growth potential (BIS)



What makes a consumer an older consumer? Impact of biological and social ageing on consumption Loss in physical strength may make opening

jars/bottles more difficult

Older people losing mental capacity/dementia may find

difficulties with problem solving or processing

information. They may also find it difficult to shop

around or exercise choice

Those housebound can be excluded from the

physical marketplace

Ageing can make it more difficult to carry heavy

weights and can also result in reduced appetite

(Twofers!)



Difficulty with shopping, communicating and handling money



There are some very wealthy people not spending



Yet people would like to participate more



Are older consumers ignored?

“Just because I’m over 60 nobody wants to sell

me anything anymore”

Germaine Greer

“Advertisers and marketers are astonishingly

neglectful of older audiences even for products

primarily sold to older people”

Mike Waterson, Chair World Advertising

Research Centre



Why don’t companies target older people?

Perception of a lack of buying

power

Stereotyping of older people as

“powerless, ugly, dowdy or

uninspiring” (alongside an

obsession with youth)

Lack of information about older

people’s sensitivity to marketing

Tynan and Drayton (2008)



But some companies are getting more interested

“Coca Cola moved into the wine, coffee, tea and

orange juice markets during the 1980s to capture

older consumer markets who were less interested in

their coke brands”

Simcock and Sudbury 2006

“Anheuser Busch, the largest US beer

maker, attempted to reach the 50 plus age group

and wound up creating one of it’s top selling brands”

Green 2004



6 Issues to consider

Older consumers as giver and recipient

Better representation of older people in advertising

Older people as users of technology (the role of

Inclusive design)

Engaging the active consumer (Shopping around)

A continuing need to tackle Age Discrimination



The older consumer is a giver and recipient

Marketers note that older

consumers buy a relatively high

proportion of toys (25%?) and

confectionary

Grandparents spend £50,000 on

their first grandchild (Oct 2010)

Younger children/grandchildren

often buy for the older person

In other words, people aren’t

always buying for themselves.



Representation of older people in advertising

Older people, particularly women, are under-represented in advertising (NB Cognitive age effect) IPC/Simcock and Sudbury (2001)

Where older people are represented, evidence that it is for products such as “pain relievers, digestive aids, lacistives and denture forumlas” Freimuth and Jamison (1979)

There is limited evidence that older people are badly represented in advertising Simcock and Sudbury

We’ve started to see more examples of companies using older models (e.g. Dove)

Scant evidence and no consensus that using older models puts younger people off the product/service Simcock and Sudbury (2001)



Technology – an opportunity (and a challenge)

Around 820,000 older consumers (65+) in the UK made an internet

purchase PRFC Analysis for ILC-UK (EFS 2007)



Inclusive design



Can you read the menu?

In many European cities one of the main groups eating in restaurants are those over 50, yet very few 50 year olds are able to read a menu by candlelight with out their reading glasses. That is because the menus are usually designed by younger people in print shops, not for senior citizens. What a crazy situation: the people who the restaurants want to market to cannot read any of their sales literature. Patrick Dixon (2008)



Shopping Around

Mixed evidence but in terms of insurance;

utilities; communications technologies, there

is evidence that as we get older we are less

likely to shop around. WHY?

Older people are happy with the product?

Difficult to calculate the benefit of switching (telecoms/utilities)

There are few alternatives (e.g. upper age limits)

Switching is a hassle

Reduced information processing abilities (but does experience

compensate for age?)

But if marketers assume people don’t shop around they won’t target

them.



Direct and indirect age discrimination

“Interflora, Britain’s biggest flower

delivery business, has been

accused of ageism as their new

‘happy birthday’ balloon range only

goes up to 60 years old.”

Telegraph, September 2010



Are older consumers changing?

“It is blindingly obvious that there is enormous difference between the seniors of yesteryear and people of the same age today.” Saga 2008

We have a wealthy cohort (on average) (and there are more of them)

Recent retirees “are more strongly defined by the impact of consumer society on their lives and expectations of post work life than previous generations”



But is this a new phenomenon?


Dodge, 1962



Let’s not assume older people are all the same



The new image of the older consumer “ageless”. Let’s take age out of the equation?

Age Neutral approach argues that:

An Age Neutral approach should be taken to

marketing

Needs of older people are not that different

from other adults

The principals of marketing to all ages are the

same

Lifestyle or interest is going to be more

important than age

Dick Stroud



Summary

The older consumer has money

They value good service

Lots of companies get it wrong

Age not best predictor of behaviour

There is money to be made by those who get it right.

But. Is there such a thing as “the older consumer”?



Many thanks

David Sinclair - Head of Policy & Research,

International Longevity Centre (ILC-UK)

[email protected]

Twitter:

@sinclairda

@ILCUK


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Advice in an ageing society - Money marketing conference

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