Experts warn the state pension faces an uncertain future
Former CBI director John Cridland is reviewing the state pension age for the Government and he has admitted the future of the benefit has been thrown into uncertainty by the Brexit factor.
He told an audience at an International Longevity Centre conference the future ratio of pensioners to working age people – a major factor affecting the cost of the state pension – was now “unpredictable” due to three factors: life expectancy, fertility and post-Brexit migration policies.
He said projections showed a hard Brexit could result in the state pension age rising by at least 18 months for people currently under 40.
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The state pension may well have to be revised and this will come as a nasty surprise to many
Professor Sarah Harper
The calculations, based on King’s College London research, assume national insurance number registrations by newcomers will fall from around 600,000 to 140,000 in three years under a hard Brexit migration policy.
This will eventually lead to a million fewer under-70s funding the the pensions of a million more over-70s.
Professor Sarah Harper, director of the Oxford Institute of Population Ageing, told The Telegraph: “The state pension may well have to be revised and this will come as a nasty surprise to many.”
Today's under-40s will be making the journey to work into their mid-70s at the very least
Law firm Eversheds Sutherland, which is researching the effect of Brexit on the state pension age, has warned that if the Government fails to raise state pension age amid falling migration, it will have to raise taxes instead.
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Eversheds Sutherland director Francois Barker said: “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.
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"This may force the Government to increase state pension age, reduce the rate of the state pension or raise taxes.”
A spokesman at the Department for Work and Pensions 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.”
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