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Ageing population is a ticking timebomb for UK

The OBR has sounded an alarm bell on the long-term cost of supporting the UK’s ageing population, saying there are ‘difficult decisions’ to make once the national books have been put into balance following the financial crisis.

The warning from Robert Chote, chairman of the OBR, echoed a prediction in a paper this weekend from the Adam Smith Institute.

The influential right-wing think-tank claimed Britain could face a ‘fiscal crisis along Irish lines’ by 2019, due to the pressures of the ageing population coupled with other welfare spending.

The OBR has sounded an alarm bell on the long-term cost of supporting the UK’s ageing population, saying there are ‘difficult decisions’ to make once the national books have been put into balance following the financial crisis.

The warning from Robert Chote, chairman of the OBR, echoed a prediction in a paper this weekend from the Adam Smith Institute.

The influential right-wing think-tank claimed Britain could face a ‘fiscal crisis along Irish lines’ by 2019, due to the pressures of the ageing population coupled with other welfare spending.

Warning: The OBR has sounded an alarm bell on the long-term cost of supporting the UK¿s ageing population

The ASI said the £1trillion of public debt forecast for next year is only ‘a tiny fraction of the story’ and that ‘hidden under the counter’ are obligations to a ‘growing and increasingly dependent population’.

It declared there were strong grounds for concern that this level of spending will not be sustainable.

• Ageing population may push pension age to 70 {thisismoney.co.uk}

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In its report, the OBR also said that unless the Government introduces policy changes, the rise in age-related expenditure risks putting the public finances on an unsustainable path.

The OBR’s projections suggest age-related spending, including education aimed at the younger segment of society, will rise to 27.1 per cent of GDP by 2050 from 22.5 per cent now.

Spending on the older age groups – pensions, long-term care and health – is projected to rise to nearly 30 per cent by 2050 to more than a fifth of GDP.

 

The Government has already unveiled controversial proposals to bring forward an increase in the state pension age for men and women to 66, which has led to protests that female pensioners in particular could lose out as a result.

A future crisis for the elderly could be exacerbated as a number of governments, including France and Hungary, are attempting to raid their national pension assets to meet immediate needs. Ireland agreed to tap billions of euros from its pension reserves as part of its bailout deal with the EU.

Ageing population may push pension age to 70

By Ruth Sunderland

30 November 2010

The state pension age will need to jump to 70 while public-sector workers are forced to pay more and get less from their pensions, it was claimed yesterday.

Retire later: We may all have to work for longer.

The warning was triggered by a bleak statement from the Office for Budget Responsibility that spending on old people is 'unsustainable'.

At present, around 22.5% of Britain's entire economic output is spent on 'aged related expenditure', such as pensions and the NHS.

The OBR's projections suggest age-related spending, including education aimed at the younger segment of society, will rise to 27.1% of GDP by 2050. Spending on the older age groups - pensions, long-term care and health - is projected to rise to nearly 30% by 2050 to more than a fifth of GDP. The Government has already unveiled controversial proposals to bring forward an increase in the state pension age for men and women to 66, which has led to protests that female pensioners in particular could lose out as a result.

But it is likely to keep on rising to cut the massive cost of paying the state pension, currently £97.65 per week.

Experts say it could eventually be increased to 70. For public-sector workers, they are likely to be forced to pay more, retire later and see their final salary pensions replaced by a cheaper alternative.

A Government review by the former Labour minister Lord Hutton, which will report next year, has already said 'the status quo is not tenable'.

Laith Khalaf, pensions analyst at the financial advisers Hargreaves Lansdown, said: 'The demographic explosion is going to be a big shock to our pension system. A state pension age of 70 may not be too far away.

 

Read more: http://www.thisismoney.co.uk/pensions/article.html?in_article_id=519064&in_page_id=6#ixzz1EKpkeWV8

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