Rising Projections of UK Pension Costs Underline Importance of Fiscal Prudence

Recent upward revisions to projections of long-term UK state pension costs reinforce the importance of fiscal prudence today to ensure budgetary sustainability in the future, said a report published this week by Standard & Poor’s Ratings Services. The article, entitled, UK Fiscal Prudence Vital To Manage The Growing Cost Of Growing Old, notes that the recent report by the Pensions Commission, chaired by Adair Turner, was based on significantly higher assumptions of state pension costs by 2050 than earlier projections by the UK Treasury. Moreover, the Treasury itself, in its Long-Term Public Finance Report that accompanied the December 2005 pre-budget statement to parliament, has raised its forecast of state pension costs in the 2050s to 6.6 per cent of GDP, from 5.6 per cent in earlier reports.


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