Greenspan warns on ageing threat

The 78-year-old Fed chief has often warned on ageing

Prompt action is needed to fund pensions for the ageing US population, the head of Federal Reserve has said.

Alan Greenspan told a Fed-sponsored symposium that workers face the prospect of either higher taxes or a raised retirement age.

He pointed to the impending retirement of the "Baby Boomers" born just after World War 2 as the trigger for action.

"If we delay, the adjustments could be abrupt and painful," the 78-year-old Fed chief said.

His prepared remarks contained no reference to interest rates or the state of the economy.

Better off - but not by much

The Fed chief's warning to the symposium, at the Wyoming ski resort of Jackson Hole, marks a return to a theme he has addressed several times this year.

The symposium itself is devoted to demographics - the study of population dynamics - and its impact on the global economy.

Despite the warnings, Mr Greenspan stressed that the US's high level of immigration meant it was better equipped to handle the "greying" of its population than some competitors.

Birth rates in several European countries, not to mention Japan, are falling far short of replacement rates, for instance.

But even so, he cautioned that Social Security - the US term for state retirement pensions - and Medicare, the healthcare programme for the elderly, were at risk.

"If we have promised more than our economy has the ability to deliver to retirees without unduly diminishing real income gains of workers, as I fear we may have, we must recalibrate our public programmes so pending retirees have time to adjust," he said.

Payroll taxes could not bear the burden, he said, effectively implying that encouraging longer working lives might be the best solution.

The number of people over 65 in the US is expected to double by 2035.