UK Treasury claims pensioners could lose £32k in Brexit vote

Added 27th May 2016

The UK Treasury has claimed a vote to leave the European Union could see almost £5,200 ($7,640, €6,835) wiped off the value of some pension pots.

UK Treasury claims pensioners could lose £32k in Brexit vote

In an analysis published Thursday, the Treasury warned that over 65s, who own their own homes and have non-pension assets, would be £18,000 worse off with a moderate Brexit shock, and £32,000 worse off in the worst case scenario.

The research also claims that should Britain decide to leave the EU on 23 June, those with an additional pension pot worth £60,000 would see its value drop by between £1,900 and £5,200.


Meanwhile, pensioners who receive an annuity income would experience even further losses. Data from the Association of British Insurers (ABI) shows that there were around six million annuities in payment, with an average payment of £2,280 per annum in 2014 – most without inflation protection.

The Treasury predicts that these individuals would lose a real income of around £50 in the year to April 2018, while those with larger annuities would experience larger losses.

Pensions minister Ros Altmann told The Times on Friday, that a vote to leave would put all the “hard work we’ve done to invest in pensions in jeopardy in a self-defeating, pointless and unnecessary way”.

“Older people tend to be more sceptical about Europe than their children and grandchildren but it’s important that pensioners, as well as those planning retirement, realise that they will be worse off it we turn our backs on the biggest free trade single market in the world,” said Altmann.

Facts and figures

The Treasury analysis also looked at the impact Brexit would have on someone aged 50.

According to its data, an individual with pension savings of £20,000, contributing 8% of their earnings into a pension fund between now and 2030, would be between £223 and £335 a year worse off in retirement.

The department predicts that in the event of a Brexit, inflation would rise by 2.5% in the first year, reducing the real value of state pensions, with retirees being £137 worse off each year.

Speaking to the BBC, Britain’s chancellor of the exchequer George Osborne said it's important that pensioners understand what's at stake for them if they choose to leave the EU.

"Pensioners who have worked hard all their lives deserve dignity, security and certainty in retirement. That's what we all hope for and what any responsible government should seek to provide," he said.

'Utterly outrageous'

However, Vote Leave campaigner and former pensions secretary Iain Duncan Smith, lambasted the figures as “an utterly outrageous attempt by the government to do down people’s pensions”.

"The biggest threat to British pensions is the European Commission's proposals to undermine occupational pensions, which the government themselves have described as 'damaging and reckless'.

"Meanwhile, tax proposals from Eurozone countries will wipe billions off British assets hitting pension funds hardest," he said.

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Brexit pensions: fact or fiction

'“Older people tend to be more sceptical about Europe than their children and grandchildren ... ” said Altmann.' Probably something to do with the fact that we experienced pre-market trade before Heath elected to apply for EEC - not EC, or EU - membership at any cost, without a referendum, and having twice been given the metaphorical finger by de Gaulle - something that should have seen a PM with more spine telling the French to kiss the British derriere. It didn't take long to witness the then EEC gravy train in action; the inefficient French farmers being mollycoddled with subsidies; the butter mountains and milk lakes that resulted from the EEC's incompetent management; all the while with the British new entrant as a net contributor. And noticeably, Altmann and co. quote doom, gloom and figures, but no compelling evidence.

Posted by: John Allan, 28 May 2016

Dubious figures

So if the UK stays in the EU pensions will be safe and we won't suffer as much inflation? Really? This is a totally biased propaganda type of article - I am surprised the treasury has put it's name to this shamelessly bad economic article.

Posted by: russell Stagg, 30 May 2016

About Author

Monira Matin

Senior Reporter

Monira joined International Adviser in March 2016 from Informa Global Markets where she worked as a eurobond reporter for over two years, covering fixed income markets. She has previously held a number of editorial positions covering politics, insurance and technology. Monira has a degree in Journalism and Economics from City University.


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