Is Britain's pensions crisis a bigger threat than global warming?

Pensions crisis: Is Britains pensions crisis a bigger threat than global warming - at Moneyweek.co.uk - the best of the week's international financial media.

Britain's pensions crisis is right "up there with terrorism or global warming as a threat to much of what we value" - and is set to change the shape of the UK economy and society for decades. That was the stark warning delivered this week by David Willetts, Tory spokesman on work and pensions. Willetts argues that the size of corporate pensions deficits (driven by ex-employees living longer than expected) has already brought new uncertainty to company finances, and helps to explain the long bear market in stocks.

Willetts says that unless the scale of the crisis and its implications are better understood - and solutions found - then we can look forward to a grim future of corporate bankruptcies, higher taxes, a less mobile labour market and a crisis of local government - not to mention mass impoverishment in old age. The other grim prospect is of intergenerational conflict, as today's thirty-somethings rebel against the well-off generation of baby-boomers whose pensions they will have to pay. Looking further ahead, economist Laurence Kotlikoff (in his recent book, The Coming Generational Storm) warns of "fiscal child abuse", in which future generations are condemned to a future of higher taxes, higher inflation and a permanently lower standard of living in order to pay their parents' pensions.

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