UK - The International Monetary Fund (IMF) has called on the UK to implement new reforms in the public pension system to cut spending and spur growth.

The IMF said that, given the fact the public pension sector is "significantly more generous" than the private pension system, the government should aim to improve the structure of public-service pensions and reduce their cost. 

"Any near-term savings from such reforms (beyond those already budgeted) could fund growth and employment-enhancing measures, thereby making adjustment more 'growth friendly'," the IMF added.

One of the measures mooted by the organisation was a reduction of cuts in infrastructure spending.

In October last year, chancellor George Osborne revealed the government's plan to cut funding for social housing projects by £4.4bn (€4.95bn).

The IMF also recommended accelerating increases in the state pension age and indexing it to longevity.

"The government has already proposed legislation to equalise the pension age at 65 by 2018 (instead of by 2020, as under current law) and to raise the pension age to 66 by 2020 (instead of 2028, as under current law)", it said.

"However, the currently legislated hikes to age 67 (by 2036) and to age 68 (by 2046) could also be accelerated, with indexation to longevity thereafter.

"This would reduce longer-term fiscal imbalances due to ageing and could boost
medium to long-run growth by encouraging longer working lives."

Topics