People will have to work longer and pay more taxes as ageing populations put a strain on government finances, according to the managing director of the International Monetary Fund.

Christine Lagarde said the challenges facing governments this century required a policy overhaul.

Without reforms, the combination of ageing and shrinking populations would "reduce potential growth in advanced economies by about 0.2 percentage points in the medium term - and twice as much in emerging economies," said Ms Lagarde.