Monetary Fund has warned £750bn pensions time bomb

Britain’s ageing population is threatening a pensions time bomb that could cost as much as £750billion, the International Monetary Fund has warned.

Pensioners count the money in their pocket for a general picture to illustrate the pensions crisis. For Britain, the IMF calculated that on the “not unreasonable” assumption that the entire cost would fall on taxpayers, the country’s public debt would rise from 76 per cent of gross domestic product to as much as 135 per cent.

The IMF said yesterday that even a slightly faster than expected increase in life expectancy could impose a huge new financial burden on Western economies such as Britain. “The time to act is now,” it said.

Governments and the financial sector have consistently underestimated how quickly average lifespans will rise, IMF researchers found.

They believe it has been routinely understated by about three years, which could render public finances unsustainable, they warned. For Britain, the IMF calculated that on the “not unreasonable” assumption that the entire cost would fall on taxpayers, the country’s public debt would rise from 76 per cent of gross domestic product to as much as 135 per cent.