Commenting on the Office of Budget Responsibility's Fiscal Sustainability Report, Mike Morrison, Head of Pensions Development at AXA Wealth said:
"The report has forecast a rise in public spending from 36.3 per cent of GDP in 2016 to 41.7 per cent of GDP by 2061, with the main drivers the increased cost of health spending, state pension and social care as longevity rises. Furthermore, we are aware that there are long term plans to increase the state pension age to 68, yet last year's Marmot Review revealed that more than three quarters of the UK population will have some form of disability before this age. This makes any further extensions very difficult. How can we tell people they will not get their state pension until an age when they are likely to have already experienced health issues? The reality may not be feasible.
"The report's findings support my belief around the recent Dilnot Commission report, specifically that the industry must develop new product innovations to support the needs of those in later life, and this requires investment and collaboration between the government and financial services industry.
"While there are products in existence which help to tackle this funding problem, we need to build flexibility into these. We should support people in creating a fund which exclusively exists to fund long term care. With this in mind, I believe that there should be an allowance in addition to the annual pension contribution, which would also be tax efficient. These savings can serve to support individuals costs in later life. With this in mind it is essentially qualified and independent financial advice is available to help consumers prepare for their retirement."
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