Brexit migration cuts may push state pension age up

BRITONS may have to work longer if immigration is cut in the wake of Brexit, the Government’s pension adviser warns today.

John Cridland, a former CBI director reviewing the state pension age for the Government, said the “Brexit Factor” had made the future of the state pension uncertain. The Government’s decision on pension changes, due in May, will be informed by Mr Cridland’s report to be published one month earlier.

New calculations reveal a “hard Brexit” in which migration is greatly reduced, could push up retirement ages, potentially forcing people to work well into their mid-70s.

Mr Cridland’s forthcoming report will be based on the latest Office for Budget Responsibility forecasts, which do not take Brexit into account, meaning it could quickly become outdated. However, he told an audience at an International Longevity Centre confer- ence that 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.

Projections calculated by actuaries at Hymans Robertson show a “hard Brexit” could result in the state pension age needing to be raised by 18 months for people currently under 40.

The calculations are based on projections by researchers at King’s College London which assume national insurance number registrations by migrants fall after “extreme” Brexit migration policy from around 600,000 to

140,000 in three years. Eventually this would lead to over a million fewer under 70 paying the pensions of over a million more over 70. Prof Sarah Harper, director of the Oxford Institute of Population Ageing, said: “The state pension may well have to be revised and this will come as a nasty surprise to many.”

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. Francois Barker, a director at the firm, 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.”

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.”