Pension age could rise in the wake of Brexit
If cuts to immigration are made following Britain’s departure from the EU, Britons may be forced to work longer.
According to the government’s pension adviser John Cridland, the future of the state pension had been made uncertain due to the “Brexit Factor”.
A former CBI director, Mr Cridland is reviewing the state pension age and is due to publish a report which will inform the government’s decision on pension changes.
If a so-called “hard Brexit” strategy were adopted, where migration was heavily reduced, new calculations reveal that retirement age could inflate. This would potentially mean people in their 70’s would still have to work.
The report to be published by Mr Cridland will be based on figures – the Office for Budget Responsibility forecasts – which do not account for Britain’s departure from the EU. It is likely that the report may quickly go out of date.
This is not to say that Cridland will not take the potential impact of Brexit into account, however. He recently spoke at a conference at the International Longevity Centre, regarding the future ratio of pensioners to working age people. As a vital factor which affects the state pension costs, he stated that this was now “unpredictable” because of three key factors: fertility, life expectancy and migration policies post-Brexit.
in the wake of a “hard Brexit”, actuaries from Hyman Robertson have forecasted that the state pension age for may rise by 18 months for those currently under 40.
The figures are based on the projections by King’s College London researchers. The calculations assume national insurance number registrations from migrants may decline from about 600,000 to 140,000 in three years, should an extreme migration policy be adopted.
Director of the Oxford Institute of Population Ageing, Professor Sarah Harper stated: “The state pension may well have to be revised and this will come as a nasty surprise to many.”
The potential impact of Brexit on pension age is being researched by law firm Eversheds Sutherland. They have warned that if the state pension age is not raised by the government in migration is falling, taxes will have to be increased instead.
A director at the firm, Francois Barker stated: “All the signs are that Brexit is likely to reduce the number of people of working age coming into the UK from the EU and, unless this shortfall is made up elsewhere, the UK’s old-age dependency ratio looks set to rise even further than currently projected.
“This may force the Government to increase state pension age, reduce the rate of the state pension or raise taxes.”
A Department for Work and Pensions spokesman said: “We are committed to reviewing the state pension age each parliament and take into account the most up to date projections at the time.”