Brexit could push state pension age up, report suggests
Immigration cuts as a result of Brexit could have a big impact on the future direction of the state pension age (SPA), the head of the state pension review John Cridland has suggested.
Speaking at an International Longevity Centre conference, Cridland said immigration is a big factor in the split between working age people and pensioners, the Telegraph has reported.
According to Cridland, the UK’s exit from the EU meant this ratio will be ‘unpredictable’ in the future.
Cridland, a former director general of the Confederation of British Industry (CBI), is currently heading a review of the SPA. A report detailing his findings is set to be published next week.
A review will form the basis of government policy on the SPA.
Research from consultancy firm Hymans Robertson has found the SPA could increase by 18 months for those under 40 because of a ‘hard Brexit’, the Telegraph report said.
This research was based on projections used by the King’s College London which assumed that migrant levels fall from 600,000 to 140,000 over three years.
Francois Barker, director at law firm Eversheds Sutherland, which is looking at the effect of leaving the EU on the SPA, 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.
‘This may force the government to increase state pension age, reduce the rate of the state pension or raise taxes.’
Last week shadow pensions minister Alex Cunningham told New Model Adviser® his party was considering putting forward a case to allow people to access their state pension at different ages depending on their career and life expectancy.
However the concept of a variable SPA has been played down by Cridland previously, as he said last year that a variable SPA would ‘horrendously complicated’ to administer.
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