SO WHAT ARE THE FACTS?

MILLIONS of pensioners yesterday woke up to startling claims that they stood to lose £32,000 each if Britain votes to leave the EU.

These claims were reiterated by pensions minister Baroness Altmann on the Radio 4 Today programme, during which she warned Brexit would cause huge uncertainty for older people.

Brexiteers hit back, labelling the Treasury’s analysis ‘scaremongering’ and arguing that the real threat to pensions was the EU itself. Here, Money Mail Editor DAN HYDE explains exactly how your retirement has already been affected by the EU – and what could happen after next month’s poll.

STOCK MARKET TURBULENCE:

MOST financial analysts agree that the stock market is likely to dip if Britain exits the EU. Traders hate uncertainty – and there would be plenty of that on June 24. But it’s impossible to predict exactly how share prices will react.

Typically, people reaching retirement have around £40,000. So to lose the lot, stock markets across the world would have to fall almost to zero. Modern pension funds invest savers’ money across the world and investing experts will simply buy and sell shares elsewhere.

PENSION PAYOUTS:

MANY savers who have retired over the past few years have been stung by EU policies.

On January 1, the EU introduced a strict ruling forcing insurance companies to hold more cash on their balance sheets. The effect has been to push down pension payout rates to record lows.

This is because holding more cash in reserve deprives insurers of money to pay out on annuities, which savers have traditionally bought to turn their pension pots into retirement incomes.

GENDER NEUTRAL PENSIONS:

ANOTHER major blow to savers’ retirement incomes was the EU’s ill-advised ban on insurance companies offering different prices to men and women.

In December 2012, the EU ruled that all annuity rates had to be the same, regardless of the customer’s gender. This was terrible for men, as they had historically received a larger payout due to shorter life expectancies.

The silver lining was supposedly that women would see a big boost. But that ignored the fact that many women had given up careers to raise a family and were relying on their husband’s savings. Amid all the confusion, experts say insurers cashed in by cutting male annuity rates far more than they increased women’s.

FINAL SALARY THREAT:

THE Treasury’s analysis completely ignored the major threats lurking if Britain remains in the EU. An estimated 1.75million people are still paying into final salary pensions in Britain. When you add in those waiting to claim one, the total is nearer 7.3million. Final salary pensions were threatened with complete extinction in 2013 when the EU tried to bring in new rules to force pension funds to hold more cash in reserve.

Ministers in the UK estimated that it would have heaped £400billion of extra costs on to final salary pensions. That would likely have forced many of the schemes still open to new members to close.

In the end, Brussels grudgingly granted a reprieve. These plans may be resurrected if Britain stays in the EU.