Rich countries face ageing populations
The UK is not alone in facing this problem. It applies in Japan, China and Western Europe. It poses problems for healthcare, in that older people have typically consumed a large share of it. It affects pensions because there will be fewer young people in work to pay the taxes that support pensions for the elderly.
An important insight is that an ageing population is only a burden if we insist on treating the old as dependants from the moment they retire. The real problem is a cliff-edge model of economic participation via full employment, and then nothing. This has been the traditional model of retirement.
We could try a graduated withdrawal from the workforce. Instead of retiring at 67, workers could move through a decade-long taper, perhaps 80%, then 60%, then 40% of full working engagement, with tax and pension incentives calibrated accordingly. This keeps experienced workers productively engaged, delays full pension drawdown, and crucially keeps them healthier because idleness is a serious mortality risk. Japan has experimented with versions of this, but Britain has not done so systematically
We could create a lightly administered platform matching retired professionals with small businesses, schools, NHS trusts, and charities, not as volunteers, but as micro-contractors paid at modest but real rates. This might see a retired GP doing two sessions a week in a community clinic, or a former engineer reviewing planning applications for a local council. This recaptures enormous latent human capital currently sitting idle, reduces NHS demand by keeping people purposeful and sociable, and generates taxable income that partially offsets pension costs.
Individuals who demonstrably maintain their health by wearable metrics or periodic assessment could receive enhanced annuity rates or reduced NHS co-contributions. This would align personal incentives with the fiscal interest of the state. Many of the unhealthy behaviours that generate most late-life NHS demand are substantially voluntary, and prices could reflect that.
The unifying thread is this: the problem is not that there are more old people, but that institutions designed in the 1940s still treat old age as a single undifferentiated state of dependence. A 68-year-old in 2026 is biologically and cognitively quite different from a 68-year-old in 1950. Policy has simply not caught up with that biological fact.
The Japanese case adds one further wrinkle worth noting. Their resistance to immigration means automation is existentially important to them in a way it is not yet for Britain. If robotics and AI genuinely compress the cost of elder care over the next decade, and there are reasonable grounds for thinking they will, the fiscal arithmetic changes significantly. Britain should probably be watching Tokyo's care-robot experiments rather more closely than it currently does. Automation is an alternative to low-cost labour.
Madsen Pirie
