UK warned over deficit as population ages
UK – The UK has been warned by the IMF to cut its deficit “to provide more comfort” against liabilities such as population ageing.
“A lower deficit would provide more comfort against potential contingent liabilities (including those from population aging),” the International Monetary Fund said in a report on the UK economy.
“A key challenge is to ensure adequate provision of pensions as the population ages,” the IMF said. “Rising longevity and the drop in equity markets have caused some employers to re-evaluate their pension provision, with many defined-benefit schemes switching to defined contribution.
Yesterday saw the release of government data which projected that the number of people of pension age is set to rise by almost 12% to 12.2 million in the next 10 years.
The IMF backed the UK’s traditional voluntary private retirement savings model.
“Ultimately, for the state to avoid contingent pension liabilities, it is critical that the private sector save sufficiently. To that end, we view the government's strategy of promoting voluntary private savings for retirement as appropriate.”
But the body called for “a flexible proactive approach” to assessing the performance of this strategy – as such it welcomed the creation of the independent Pension Commission.
The IMF was positive on the wider UK economy: “In the face of sizable global shocks over the last few years, the economic performance of the UK has been enviable.”