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| EU Referendum: Treasury pensions predict sparks furious row with Leave campaign | EU Referendum: Treasury pensions predict sparks furious row with Leave campaign |
| (7 days later) | |
| The Treasury has warned that millions of current and future pensioners would be worse off if the UK leaves the European Union sparking a furious row with the Vote Leave campaign. | The Treasury has warned that millions of current and future pensioners would be worse off if the UK leaves the European Union sparking a furious row with the Vote Leave campaign. |
| In a paper released just hours before the civil service and the Government as a whole has to take a neutral stance on the referendum, the Treasury said its analysis suggested that Brexit would cause inflation to rise, eroding the value of state pension increases, costing recipients £137 a year. | In a paper released just hours before the civil service and the Government as a whole has to take a neutral stance on the referendum, the Treasury said its analysis suggested that Brexit would cause inflation to rise, eroding the value of state pension increases, costing recipients £137 a year. |
| Those with an additional pension pot worth £60,000 would see its value drop by £1,900, it said. | Those with an additional pension pot worth £60,000 would see its value drop by £1,900, it said. |
| However, Vote Leave said the analysis was "utterly outrageous" and questioned the timing of the report that came just before the official election Purdah period kicked in. | However, Vote Leave said the analysis was "utterly outrageous" and questioned the timing of the report that came just before the official election Purdah period kicked in. |
| During that period civil servants are no longer allowed to help the ‘Remain’ campaign and have to keep officially neutral. | During that period civil servants are no longer allowed to help the ‘Remain’ campaign and have to keep officially neutral. |
| Former Pensions Secretary Iain Duncan Smith, who is campaigning for Vote Leave, said: "This is an utterly outrageous attempt by the government to do down people's pensions and is little more than a cynical attempt to distract from the government's broken promises on immigration." | Former Pensions Secretary Iain Duncan Smith, who is campaigning for Vote Leave, said: "This is an utterly outrageous attempt by the government to do down people's pensions and is little more than a cynical attempt to distract from the government's broken promises on immigration." |
| "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'. | "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. | "Meanwhile, tax proposals from Eurozone countries will wipe billions off British assets hitting pension funds hardest," he said. |
| But the Chancellor George Osborne said it was important that pensioners "understand what's at stake for them". | But the Chancellor George Osborne said it was important that pensioners "understand what's at stake for them". |
| Older voters are more likely to turn out at elections and polling has indicated they are more likely to back Brexit, making them a key target for both camps ahead of the June 23 referendum. | Older voters are more likely to turn out at elections and polling has indicated they are more likely to back Brexit, making them a key target for both camps ahead of the June 23 referendum. |
| The report shows that the total assets held by those aged over 65 would drop by £170 billion in the event of a more moderate shock, and by £300 billion in a more severe shock. | The report shows that the total assets held by those aged over 65 would drop by £170 billion in the event of a more moderate shock, and by £300 billion in a more severe shock. |
| The analysis suggests that for a person aged over 65, with the median portfolio of housing and non-pension assets, the loss in wealth is estimated to be around £18,000, or up to £32,000 in the severe shock scenario. | The analysis suggests that for a person aged over 65, with the median portfolio of housing and non-pension assets, the loss in wealth is estimated to be around £18,000, or up to £32,000 in the severe shock scenario. |
| An existing pensioner, with a defined contribution pot worth £60,000 invested in a typical fund would see between £1,900 and £5,200 wiped off its value by next year, the report suggested. | An existing pensioner, with a defined contribution pot worth £60,000 invested in a typical fund would see between £1,900 and £5,200 wiped off its value by next year, the report suggested. |
| For people expecting to retire around 2030, today's 50-55 year-olds, the longer-term effects of lower wages, higher inflation and stock market uncertainty will hit their funds, the report said. | For people expecting to retire around 2030, today's 50-55 year-olds, the longer-term effects of lower wages, higher inflation and stock market uncertainty will hit their funds, the report said. |
| The analysis examined the position of someone aged 50, on average wages and with defined contribution pension assets of £20,000, who is contributing 8% of their earnings into their pension fund between now and 2030. | The analysis examined the position of someone aged 50, on average wages and with defined contribution pension assets of £20,000, who is contributing 8% of their earnings into their pension fund between now and 2030. |
| It found their pension assets could be between £3,800 and £5,800 lower in 2030, in today's prices, if the UK cuts ties with Brussels - making them between £223 and £335 a year worse off in retirement. | It found their pension assets could be between £3,800 and £5,800 lower in 2030, in today's prices, if the UK cuts ties with Brussels - making them between £223 and £335 a year worse off in retirement. |
| For people on the state pension, rising prices would mean an end to inflation-busting increases in their income. | For people on the state pension, rising prices would mean an end to inflation-busting increases in their income. |
| The triple-lock means that the state pension rises every year by the highest of inflation, earnings growth or 2.5%. | The triple-lock means that the state pension rises every year by the highest of inflation, earnings growth or 2.5%. |
| But with inflation forecast to be around 2.5% a year after Brexit, the increase will only keep pace with prices rather than rise above them. | But with inflation forecast to be around 2.5% a year after Brexit, the increase will only keep pace with prices rather than rise above them. |
| In an illustration of the link between the wider economy and pension assets, the Treasury highlighted the 10% fall in their value in the 1990 recession and the 15% drop in 2008 at the time of the financial crash. | In an illustration of the link between the wider economy and pension assets, the Treasury highlighted the 10% fall in their value in the 1990 recession and the 15% drop in 2008 at the time of the financial crash. |
| Mr Osborne said: "Much of the debate so far has focused on the potential economic fallout of a vote for Leave for those now in work, in terms of the impact on their jobs. | Mr Osborne said: "Much of the debate so far has focused on the potential economic fallout of a vote for Leave for those now in work, in terms of the impact on their jobs. |
| "But it's important that pensioners understand what's at stake for them too on June 23. | "But it's important that pensioners understand what's at stake for them too on June 23. |
| "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. | "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. |
| "As Chancellor, I feel very strongly that my first responsibility is for people's jobs, livelihoods and living standards. | "As Chancellor, I feel very strongly that my first responsibility is for people's jobs, livelihoods and living standards. |
| "I couldn't recommend something that we know would put all that at risk." | "I couldn't recommend something that we know would put all that at risk." |
| Pensions minister Baroness Altmann said: "If we leave the EU, it is simply not credible to suggest that pensioners or pensions will benefit." | Pensions minister Baroness Altmann said: "If we leave the EU, it is simply not credible to suggest that pensioners or pensions will benefit." |
| Mark Wilson, chief executive officer at financial giant Aviva, said: "It's not rocket science. Brexit means uncertainty. That spooks markets. | Mark Wilson, chief executive officer at financial giant Aviva, said: "It's not rocket science. Brexit means uncertainty. That spooks markets. |
| "A fall in equities and in sterling is undeniable - the only question is by how much and for how long. That's going to hit people'spensions." | "A fall in equities and in sterling is undeniable - the only question is by how much and for how long. That's going to hit people'spensions." |