Taken from Professional Adviser:
The UK should prepare for a workforce of 80-year-olds and impose faster pension age rises to avoid a quadrupling of the savings gap to £25tn, the World Economic Forum has said.
The Geneva-based organisation predicted the current savings gap of US$8tn would quadruple to US$33tn (£25tn) by 2050 if urgent action was not taken to tackle the challenges of an ageing population, the FT reported.
In its report the WEF identified the UK as one of several countries facing a "pensions time-bomb".
"The anticipated increase in longevity and resulting ageing populations is the financial equivalent of climate change," head of financial and infrastructure systems Michael Drexler said.
"We must address it now or accept that its adverse consequences will haunt future generations, putting an impossible strain on our children and grandchildren."
According to the WEF, ageing populations, falling birth rates and gaps in access to pensions were the main sources of the widening "pension gap".
This was defined as the shortfall in money needed for a retiree to keep their income at 70% of pre-retirement levels.
The gap widens when income from state, personal and workplace pensions is inadequate to meet this replacement rate.
The WEF recommended a retirement age of 70 should be the norm by 2050 in countries where future generations have life expectancies of more than 100, which includes the UK.
"If increases in life expectancy were matched by corresponding increases in the retirement age, the challenge would be less acute," the report said.
Drexler said policymakers had to immediately consider how to foster a functioning labour market for older workers.
"Policymakers do need to be thinking now about how to integrate 75 and even 80 year olds in the workplace," he told the FT.
Drexler said a manifesto proposal by Labour to scrap the pension age rise to 67 by 2028 was "probably not a good idea".
The WEF also recommended the £1m Lifetime Allowance should be scrapped because it was sending the "wrong signal" that there was only so much you should contribute to your pension.
The UK should prepare for a workforce of 80-year-olds and impose faster pension age rises to avoid a quadrupling of the savings gap to £25tn, the World Economic Forum has said.
The Geneva-based organisation predicted the current savings gap of US$8tn would quadruple to US$33tn (£25tn) by 2050 if urgent action was not taken to tackle the challenges of an ageing population, the FT reported.
In its report the WEF identified the UK as one of several countries facing a "pensions time-bomb".
"The anticipated increase in longevity and resulting ageing populations is the financial equivalent of climate change," head of financial and infrastructure systems Michael Drexler said.
"We must address it now or accept that its adverse consequences will haunt future generations, putting an impossible strain on our children and grandchildren."
According to the WEF, ageing populations, falling birth rates and gaps in access to pensions were the main sources of the widening "pension gap".
This was defined as the shortfall in money needed for a retiree to keep their income at 70% of pre-retirement levels.
The gap widens when income from state, personal and workplace pensions is inadequate to meet this replacement rate.
The WEF recommended a retirement age of 70 should be the norm by 2050 in countries where future generations have life expectancies of more than 100, which includes the UK.
"If increases in life expectancy were matched by corresponding increases in the retirement age, the challenge would be less acute," the report said.
Drexler said policymakers had to immediately consider how to foster a functioning labour market for older workers.
"Policymakers do need to be thinking now about how to integrate 75 and even 80 year olds in the workplace," he told the FT.
Drexler said a manifesto proposal by Labour to scrap the pension age rise to 67 by 2028 was "probably not a good idea".
The WEF also recommended the £1m Lifetime Allowance should be scrapped because it was sending the "wrong signal" that there was only so much you should contribute to your pension.
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