Working Overtime
Working until 70 is more likely in a post-Brexit Britain, says study.
As Brexit negotiations continue in Brussels, and despite Cabinet consensus on a transition period, the government is still committed to its ambition to cut net immigration to the tens of thousands.(1)
Exiting the EU will ultimately end the free movement of EU citizens into the UK, while still allowing the country to attract “the brightest and the best”.(2)
But critics say that a cap on immigration could not only cut off a vital supply of labour, but worsen the impact of the UK leaving the European Union on the State Pension and the State Pension age.
Unless the shortfall of people of working age coming into the UK is made up elsewhere, the UK’s old-age dependency ratio looks set to rise even further than currently thought.
The calculations are based on projections by researchers at King’s College London that assume the number of National Insurance-paying migrants falls from around 600,000 to 140,000 within three years.(3)
by a year to 68 from 2037 for workers born between April 1970 and April ’78.(5)
But a hard Brexit could
result in the State Pension age needing to be raised to 70 for people currently under 40.(6)
“Unfortunately, we’re already in a position where State Pension age is playing catch-up with improvements in life expectancy,” says Jon Hatchett, head of corporate consulting at Hymans Robertson.
“Dramatic changes to migration make this balancing act even harder. If migration does fall, so too will the number of workers to support the increasing numbers of people of pensionable age. Undoubtedly this will put pressure on the affordability of the State Pension and, as a result, the age at which you can claim it.”
The fi ndings demonstrate why those who reduce their reliance on the State Pension and build a suffi cient pension pot from earnings will have the best chance of choosing when they retire.
Please visit my website or contact me to receive a complimentary guide covering Wealth Management, Retirement Planning or Inheritance Tax Planning.
Eventually this would lead to over a million fewer people under the age of 70 paying the pensions of over a million more over 70.(4)
A scenario in which migration is greatly reduced could push up retirement ages dramatically, potentially forcing people to work well into their mid-70s.
John Cridland, former director-general of the Confederation of British Industry, led a review of the State Pension age, and has said that the UK’s exit from the EU means that the future ratio of pensioners to working age people – a major factor affecting the cost of the State Pension – was “unpredictable” in a post-Brexit Britain.
His report advised moving the State Pension age to 68 earlier than the existing timetable; and indeed David Gauke, the Work and Pensions Secretary, announced on 19 July that the pension age will rise
Scott Symes
APFS DipPFS DipFA CeMap Chartered Financial Planner
01202 951227 07885 899742
scott.symes@
sjpp.co.uk www.scottsymeswm.co.uk
1
http://www.bbc.co.uk/news/uk-politics-39840503, 8 May 2017 2 Theresa May, ‘We will create a fairer society’,
www.gov.uk, 19 January 2017
3 Oxford Review of Economic Policy, Volume 33, ‘The economics of Brexit: what is at stake?’, March 2017
4 As above 5 Hansard, Volume 627, 19 July 2017 6 John Cridland, Department for Work and Pensions, State Pension age independent review: fi nal report, April 2017
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