The UK's population is expected to grow by 4.4 million to 64 million over the next 25 years. Although the number of people aged 15-50 is projected to fall by 1.5 million, those aged 50+ are forecast to increase by over 6 million.
The ageing population brings major opportunities and risks for firms, while for consumers the choices they make both during their working life and at retirement make a big difference to their financial well being.
The FSA commented:
'The consequences of an ageing population have not yet been fully appreciated. There are risks here, but there are also opportunities for innovative products and services that address the changing needs of consumers. It will not be enough for the industry simply to continue offering the products that worked 30 years ago.
'Consumers, too, must understand that they will face greater exposure to the effects of financial volatility. They have difficult but important decisions to make.'
The potential risks include the sale of complex products to consumers who don't understand them and the mispricing of retirement products. It also calls for more resources to be applied to increasing consumers' understanding of the risks they face and the steps that they must take to avoid an impoverished old age.
The report 'Financing the Future: Mind the Gap! - Implications of an Ageing Population' (PDF), is available here .