Advertisement

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.

Advertisement - Article continues below

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.

Advertisement
Advertisement

Recommended

Companies cut back on their pensions bills
Personal finance

Companies cut back on their pensions bills

Britvic is the latest firm hoping a cheaper inflation index will cut pension costs. David Prosser reports.
28 Aug 2019
We're all going to have to be a lot more flexible
UK Economy

We're all going to have to be a lot more flexible

As the world gets older, we'll all have to retire later and finance it for longer. That's going to take a major rethink about an awful lot of things, …
6 Aug 2020
Don’t be tempted to transfer out of your final salary pension scheme
Pensions

Don’t be tempted to transfer out of your final salary pension scheme

Switching out of final-salary schemes is very rarely a good idea, no matter how much money is on offer
29 Jul 2020
How to have a low-tax retirement in the sun
Pensions

How to have a low-tax retirement in the sun

Greece is to offer a ten-year tax incentive to foreign pensioners. That’s a pretty good offer, says Merryn Somerset Webb. But it might not last.
20 Jul 2020

Most Popular

BP has slashed its dividend – and markets love it
Income investing

BP has slashed its dividend – and markets love it

BP has bowed to the inevitable and cut its dividend in half – and its share price promptly rose. John Stepek explains what it means for shareholders …
4 Aug 2020
Listed companies are dying out, and that could have serious consequences
Stockmarkets

Listed companies are dying out, and that could have serious consequences

Private equity is taking over from public stockmarkets as the biggest provider of capital to companies. That’s bad for investors and bad for society a…
3 Aug 2020
Gold hits the big $2,000 level – are Aim miners about to play catch up?
Gold

Gold hits the big $2,000 level – are Aim miners about to play catch up?

With the price of gold shooting through $2,000 an ounce, the yellow metal looks unstoppable. Things are so bullish, even Aim-listed junior gold miners…
5 Aug 2020