Demographic storm

Do we have enough young people working to support our growing number of pensioners in decades to come or are we heading for a “demographic storm’’? In the US, a Forbes article has warned that plunging birth rates and rising lifespans mean that American workers will be increasingly burdened paying for retirees. By 2030, every 2.3 American workers will be supporting one pensioner.

According to the Commission for Financial Capability, there are about

4.4 workers for every person over 65, a ratio that is expected to drop to 2.8 by 2038.

Professor Paul Spoonley, a demographer from Massey University, says we are similarly heading for a demographic storm. “I probably would describe it as a “demographic transformation”, probably similar to the post-war years (1945-65) when the baby boomers arrived.’’

He says New Zealand’s fertility rate has dropped to its lowest on record, at 1.7 births per New Zealand woman, which means we have reached sub-replacement. Our population will not grow unless we get net migration.

He says our rising dependency rate brings significant issues for New Zealanders. “The key one is how do we pay for some of our services and financial support, especially for superannuation?’’

In late 2016, Treasury warned that an ageing population would lead to less growth and more healthcare and NZ super costs over the next 40 years. To cover this rising bill, it floated options including raising GST and lifting the super age to 67.

Education Minister Chris Hipkins has warned of a“ticking time bomb” for schools as baby-boomer teachers retire and too few teachers come through to take over.

The Commission for Financial Capability is calling for proactive plans so our society, economy and workplaces can evolve and adapt to a very different world.

Retirement Commissioner Diane Maxwell says: “The number of people working relative to the number of retirees is decreasing, which will put pressure on funding for NZ Super and healthcare and leave future governments with difficult decisions. We need to rethink ‘what is old’ as our 65-year-olds are increasingly active, fit and able, and continuing to work – and importantly, don’t view themselves as old.’’