Fears over pension funding spark old age time bomb warning

A MAJOR investigation into funding pensioners is to be launched by MSPS amid fears of an old age time bomb that could have a disproportionate impact on Tayside and Fife.

A report to the Scottish Parliament’s finance committee shows the ageing population inangus means there will be less than two working people living in the county for every pensioner by 2030.

The extraordinary figure means that an average working couple would essentially have to generate enough taxes to subsidise a pensioner on their own. The submission to the committee by Professor David Bell, from Stirling Management School, revealed that by 2030 the number of pensioners in Scotland will be equivalent to 40% of its labour force, up from 25% in 2010.

Due to demographic and geographical factors the problem will be worse in rural areas, with council areas in Angus (54%), Fife (43%) and Perth and Kinross (45%) particularly badly hit.

This is due to the fact young people tend to move to more urban areas to find work.

The report states: “All parts of Scotland are expected to experience some increase in the old age dependency ratio between 2010 and 2030, but the increase is likely to be concentrated in rural areas.

“A number of authorities will have old age dependency ratios in excess of 50% by 2030.

“It is important that such variation within Scotland is understood and taken into account in setting budgets. The committee may want to consider the budgetary implications of the divergent tendencies in old age dependency ratios between urban and rural Scotland.

“It may also wish to investigate the implications of increasing the retirement age on restraining the growth in the old age dependency ratio.”

The committee will now hold an inquiry into the economic and social impact of the problem, including how the planning and delivery of public services will be affected, as well as the impact on budgets.

The committee is initially seeking written views on these issues. It will begin taking oral evidence from September, with a view to reporting on its findings next January.