IMF warns of new state-pension age changes

Savers currently planning their retirement may be in for a nasty surprise, according to the International Monetary Fund.

925_MW_P29_Pensions_Bottom

Savers currently planning their retirement may be in for a nasty surprise, according to the International Monetary Fund (IMF). On current projections, the UK's public spending on pensions is unsustainable, so future governments may need to raise the state-pension age more quickly than expected, warns its new report.

At present, both men and women are entitled to start claiming their state pension at the age of 65, with a long-term programme to equalise this age completed last month. Over the next two years, the minimum age will gradually be increased to 66, and there are further plansto raise it to 67 by 2028.

However, the government's own figures, published by the Office for Budget Responsibility, suggest that public spending on healthcare and pension benefits will have to increase by four percentage points of GDP over the next 25 years. This could mean both tax increases and further changes to the state pensions system to reduce its costs. With average life expectancies having risen sharply in most parts of the UK in recent years, the IMF thinks an even higher state- pension age is likely sooner or later.

Successive governments have left themselves room to make further adjustments, agreeing a policy to keep the state-pension age under review over time. However, changes would cause controversy, particularly if they are not phased in over an extended period or clearly explained.

Recommended

Should I buy an annuity now? Annuity rates reach 14-year high
Pensions

Should I buy an annuity now? Annuity rates reach 14-year high

Retirees can now make their original pension pot back in 15 years, down from 22 years. We look at whether now is a good time to buy an annuity.
5 Oct 2022
Should you take a 25% tax-free pension lump sum in instalments?
Pensions

Should you take a 25% tax-free pension lump sum in instalments?

Taking out a 25% tax-free lump sum sounds appealing but it might not be the best way to manage your pension
30 Sep 2022
What changes to the pensions charge cap mean for you
Pensions

What changes to the pensions charge cap mean for you

The government could raise the pensions charge cap – the amount you can be charged in your workplace's default pension fund. Saloni Sardana explains w…
27 Sep 2022
Downsizing or equity release: which is best?
Personal finance

Downsizing or equity release: which is best?

Downsizing – moving to a smaller home in later life – is far cheaper than an equity-release plan. David Prosser crunches the numbers.
13 Sep 2022

Most Popular

Should you take a 25% tax-free pension lump sum in instalments?
Pensions

Should you take a 25% tax-free pension lump sum in instalments?

Taking out a 25% tax-free lump sum sounds appealing but it might not be the best way to manage your pension
30 Sep 2022
October’s Premium Bonds: how to check if you are a winner
Savings

October’s Premium Bonds: how to check if you are a winner

NS&I has added almost 110,000 more prizes to October’s Premium Bond draw – are you a winner?
4 Oct 2022
Section 75 refunds: protection for your credit card purchases
Credit cards

Section 75 refunds: protection for your credit card purchases

Under Section 75 of the Consumer Credit Act 1974, your credit card can give you extra protection when the goods or services you buy fall short of your…
23 Sep 2022