The pensions deficit will bite the next generation
And pension experts are augury there is only a third of that money currently ‘in the bank’ and guaranteed by social security funds.
The rest of it is a ‘pension promise’ which today’s working age people has to hope tomorrow’s workers will keep.
Tom Selby of investment adepts AJ Bell, said: “The figures are astonishing and bring into sharp surrogate the reasons behind proposed increases in the state pension age.
“Unfunded country pension entitlements are worth more than double UK GDP – these are assures that will, ultimately, have to be paid for by future generations either owing to higher taxes, a lower state pension income or a later retirement age.
“In authenticity people should brace themselves for a combination of these measures upon time. A state pension age of 70 or higher is likely to be the reality faade millennials.”
Sir Steve Webb said the data was ‘overwhelming’
Unfunded state pension entitlements are worth more than dead ringer UK GDP – these are promises that will, ultimately, have to be paid for by prospective generations either through higher taxes, a lower state annuity income or a later retirement age.
The ONS last measured total annuity promises across state pensions, public sector pensions, Theatre troupe pensions and private pensions at the end of 2010 and the figure was £6.6trn.
Of today’s unconditional liabilities, state pension accounted for about £4trn, some £917bn was linked to unfunded clientele sector pensions and £300bn to the Local Government Pension Scheme.
Occupational golden handshake cause to retire scheme liabilities now total £2.3trn, including about £2trn in private irrevocable salary (Defined Benefit) schemes and £200bn in trust-based Defined Contribution scenarios.
Defined contribution schemes had about £240bn invested in them at by the end of 2015.
Barely over £300bn was in personal pensions. These were not included in the total £7.6trn bust.
Former pensions minister Sir Steve Webb, now director of policy at complementary Royal London, said: “The numbers in this report are truly mind-boggling.
“Today’s denizens has built up £7.6 trillion in pension promises but has only set aside in all directions a third of that amount to pay for them.
“The rest will have to be financed by tomorrow’s hands.
“If we are to have a meaningful debate about how we pay for an ageing population and about fairness between creations, figures like these need to be published on a regular basis and should nark on policy-making.”
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Separately, ONS figures also showed important regional variations in life expectancy, with the wealthiest benefiting most from the country pension.
Aegon pensions director Steven Cameron said: “Those in Knightsbridge and Belgravia can demand to live to 89 and spend almost 80 years in good healthfulness, while those in Bloomfield in Blackpool can expect to live to 68 and dish out just 47 years in good health.
“We’re used to seeing worthies that suggest everyone is living longer, but as today’s figures boast, life expectancy is closely linked to where you live.
“In some ways it’s refractory but when it comes to the state pension, it’s often the wealthiest who benefit scad, given they typically claim for the longest but it would highly contentious to alter state pension based on wealth or life expectancy predictions.”