- Women born in 1979 had 1.95 children by the age of 45 and men had 1.82 on average, according to the ONS (Fertility for those born in different years, England and Wales – Office for National Statistics)
- This could have serious implications for the pension and tax system as reduced fertility will result in fewer people of working age generating revenue for benefits including the state pension
- Those born in 1959 are considered to have a ‘completed family’ by 2024 with men having an average of 2 children by then and women marginally lower on 1.98
- Women born in 2008 are set to have under 1.5 children on average (the data considers these people to be the daughters of those born in 1979) and those born in 2026 are set for around 1.4
- The proportion of women not having children has remained fairly flat – at 15.7% for those born in 1979 compared to 14.8% for their mothers and 16.8% for their grandmothers
- The government’s revived Pensions Commission is currently looking at the entire pensions system, including the state pension, with its final report expected in early 2027
Sarah Coles, head of personal finance at AJ Bell, comments:
“We’re having fewer children, and our children and grandchildren are set for even smaller families. To keep a steady population in the absence of migration, couples need to have 2.1 children on average. In 2024, the average Brit was already having fewer than two, and when you add in the fact we’re living longer on average, there are some serious implications for the state pension.
“The state pension is funded by working people at the time, so when the number of younger people is set to drop and the number of pensioners is forecast to rise, it creates an imbalance. One key measure is the old age dependency ratio, which measures the number of people over state pension age per 1,000 people of working age (16-64).
“Existing figures show that in the 1990s this was broadly steady at 300. It then rose, peaking at 312 in 2010, before falling back with the rising state pension age. It was set to move back above 300 in 2025, and keep going to reach 372 in 2043. But it’s expected to drop back a bit as the state pension age rises again, before increasing to hit 394 in 2067*.
“If the government does nothing, it means fewer working people paying for the state pensions of more older people. The triple lock in its current form will also mean those pensions keep growing, and at times of low inflation and low wage inflation they will get more generous. This is likely to mean a rise in taxes for working age people and an impact on broader public services.
“The government could raise the state pension age again, but without improvements in health at older ages, this may mean more people relying on working age benefits later in life, adding to the already ballooning costs to the state. Policymakers could also make changes to the triple lock, perhaps considering a move to a ‘double lock’ – rising with either wages or prices but not getting more generous as time goes on. However, that would be politically very difficult for any government to tackle.
“At this stage, forecasts are uncertain. It’s also impossible to factor in any potential immigration policy for working age people, which might be designed to help close the gap. What’s clear from the figures, however, is that some kind of change is eventually inevitable.
“The challenges facing the state pension are being considered by the Pension Commission, which is expected to produce its final report early next year. It’s aiming to shape a pensions system that’s fair across the generations and sustainable for the decades to come.
*Source: Living longer and old-age dependency – what does the future hold? – Office for National Statistics
The changes
“The so-called ‘Silent Generation’ typically had an average of more than two children. Those born in the mid-1930s in particular were having as many as 2.4 children on average.
“The start of World War II saw this decline, so the eldest Baby Boomers were having 2.2 children, and the youngest had fewer than two. This generation saw the advent of the birth control pill at the start of the 1960s, which had a significant impact. More women in the workplace also meant the cost of childcare or the loss of two incomes became a factor when planning a family. Meanwhile, the rise in the school leaving age also meant children depended on their family financially for longer.
“Generation X has seen the number of children continue to decline, although it picked up a little for those born from the mid-1970s. More women studying at university and later marriages meant women in this generation have been having children at older ages, and having fewer of them. More women continuing to work after having children also means childcare costs threw a major spanner in the works for household finances, so fewer people could afford larger families.
“Generation Y is expected to see a fall in child numbers, from just under 2 to around 1.6 and Generation Z is expected to see it drop under 1.5%, Generation Alpha is forecast to see it fall to just over 1.4, where it is expected to flatline for Generation Beta. These generations are also contending with much higher house prices and rents, so they’re taking longer to move out and start a family. Shifting cultural norms mean they’re in no rush to have children. They’re more likely to co-habit before marriage and leave children until their 30s or beyond.”
