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

The minimum pension withdrawal age is set to rise – don’t get caught short
Pensions

The minimum pension withdrawal age is set to rise – don’t get caught short

From April 2028, the earliest age at which you can take money from your pension savings will rise to 57. It's vital that you understand the detail of …
13 Apr 2021
Make sure you max out your pension contributions this year
Pensions

Make sure you max out your pension contributions this year

If you're saving for retirement, make sure that you have used up all their allowances before the tax year ends, and contributed as much to your pensio…
31 Mar 2021
Make sure you don't go over the pensions lifetime allowance
Pensions

Make sure you don't go over the pensions lifetime allowance

Breaching the lifetime allowance for pension savings could prove very costly, says David Prosser.
15 Mar 2021
Women could be compensated for state-pension shortfall
State pensions

Women could be compensated for state-pension shortfall

A government inquiry has said that up to 200,000 women could be owed a collective £1.7bn in compensation, with the average woman being owed £13,500 in…
12 Mar 2021

Most Popular

The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021
Four investment trusts for income investors to buy now
Investment trusts

Four investment trusts for income investors to buy now

Some high-yielding listed lending funds have come through the crisis with flying colours. David Stevenson picks four of the best.
12 Apr 2021
Central banks are rushing to build digital currencies. What are they, and what do they mean for you?
Bitcoin

Central banks are rushing to build digital currencies. What are they, and what do they mean for you?

As bitcoin continues to soar in value, many of the world’s central banks are looking to emulate it by issuing their own digital currencies. But centra…
8 Apr 2021