The effect of the economy and economic processes on the size of the pensioner population is likely to be less immediate than in the case of unemployment or even disability. The financial resources that people bring into retirement are clearly in part a function of the economic conditions that prevailed at various times throughout their working lives. Whether they were able to find and sustain employment; whether they were able to save and the level of return on those savings; whether they were able to join an occupational pension scheme; and the state of the financial markets on the date of retirement – are all dependent on the pattern of economic growth and development that accompanied their age cohort. Similarly, the living standards of pensioners are likely to be closely tied to movements in inflation and interest rates following retirement, since a disproportionate proportion of their income is linked to investment. These factors determine the balance between different types of pension provision, notably by affecting the proportion of people who have incomes below the means-tested threshold, rather than the total size of the pensioner caseload. They also take long periods of time – almost an entire lifetime – to shape the pattern of benefit receipt in old age.

It could also be argued that rising life expectancy is a function of economic growth and improved living standards, and that this in turn affects the size of the pensioner population.