Longevity errors could create £750bn pensions burden: IMF

Widespread errors in government estimates of life expectancy could end up costing taxpayers billions, the International Monetary Fund warns.

Governments and the financial sector have consistently underestimated how quickly average lifespans will rise, often understating the increase by as much as three years, the IMF said.

For Britain, the IMF calculated that, on the "not unreasonable" assumption that the cost would fall on taxpayers, the country's public debt would rise from 76% of GDP to as much as 135%.

Reports calculate that additional cost would be about £750bn.

The IMF said the extra costs would come from the state pension and public sector pensions, while some would also come from the state having to rescue failed private sector schemes.

The latest estimates from the Office for National Statistics suggest that boys born in 2010 will live an average of 78.2 years, while girls will live an estimated 82.3 years.

But the IMF highlighted research by the ONS which suggested that such forecasts suffer "widespread" errors.

Projections of future life expectancy are "consistently too low in each successive fore­cast, and errors were generally large", it said.