Personal Pension  

Pension promises will not be honoured: IoD

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.

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“The risk is not that companies or governments will be brought down by pensions liabilities, but that promises will simply not be honoured.”

Adviser view

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.”