pension bomb
A pension bomb or pension time bomb is a phenomenon where demographic and other changes (typically longevity, population peaks and troughs, and long term adverse changes in the rate of return on investments, cost of living or taxation) mean that widespread difficulties will occur at some relatively predictable time in the future.
U.S. baby boomers
The pension bomb is an expected economic situation beginning in 2010. Baby boomers of post World War II are expected to hit the retirement age of 65, due to the fact they were born in 1945. This means a large number of people are expected to be claiming government benefits such as Social Security and Medicare during this time. It has been predicted that this will cause problems to the economy of the United States and other Western nations.
UK state pension and private pension
Due to the low savings ratio, increased longevity, the move towards an earlier retirement age, and new taxation of pension funds by the Labour Government, both private and public pension funds are in difficulties. Many private funds have either closed their doors to new members or moved from final salary to contribution based benefits. Many hundreds of private funds have been wound up. The government has appointed an enquiry to look at ways of ensuring that a major increase in poverty in the coming decades can be avoided. Suggestions have included compulsory pensions and extension of retirement age to seventy.
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