Writing in a 36-page report, Responding to Global Risks, the chief economist and director of policy at the Institute of Directors said total unfunded pensions liabilities could “easily double the UK’s debt-to-GDP ratio to more than 200 per cent”.
This will not “merely” cause trouble for companies, he argued, but could see risk “transmute from corporate to individual”.
He said: “Government promises will be rewritten and laws enacted to allow companies to reschedule.
“The risk is not that companies or governments will be brought down by pensions liabilities, but that promises will simply not be honoured.”
David Sheehan, IFA at Dorchester-based Opal Financial Management, said: “I think this is probably a fairly likely scenario. Pensions were set up a long time ago and haven’t adapted sufficiently to cope with changes in longevity.
“I would think that a similar scenrio is likely to occur with state pensions. People not getting the income they expect is likely to be a reality unfortunately. The majority of people just do not want to know until within five years of retirement, which is far too late to do anything about it.”