Chancellor Reeves faces pension review amid economic strain

Chancellor Rachel Reeves is facing pressure to review the state pension system as part of efforts to balance the UK budget amidst rising pensioner spending, which is projected to reach £182 billion by 2029/30. Investment expert Rachel Vahey indicated that pensioner expenditure could become a target for cost-cutting measures, especially as it could account for nearly half of the total welfare budget by the end of the decade. The Institute for Fiscal Studies (IFS) warned that tax increases might be necessary if economic conditions worsen, with pension savings being a potential area for tax hikes. Additionally, there are discussions around possibly raising the state pension age sooner than planned, which could yield substantial savings for the Treasury. However, any changes to pensions or taxes are likely to face significant public backlash and political challenges. Reeves's upcoming autumn budget will be critical as she navigates these fiscal challenges while trying to meet her self-imposed fiscal targets.