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Brexit branded totally damning for pension savers

Brexit branded totally damning for pension savers

Repercussions of Brexit are going to hit pension savers hard, according to Ian Blackford, member of parliament and shadow Scottish National Party spokesperson for pensions.

On 24 June this year, 51.9 per cent voted to sever Britain’s 43-year membership of the European Union and 48.1 per cent voted to stay in.

Speaking today (29 November) at the Westminster Employment Forum Keynote Seminar, which focused on priorities for pensions policy in the UK, Mr Blackford said an estimated 75 per cent are now expected to have a retirement income below the government's recommended level.

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Mr Blackford said: "Many workers with defined contribution schemes are left choosing between having to pay far more into their pension or accept a lower income in retirement or working for longer.

"Hymans Robertson have called this situation terrifying because an estimated the average employee will need to save 2-3 per cent a year more over their lifetime to deliver the same income that was estimated pre-Brexit."

Mr Blackford said of those who have defined contribution pensions it is estimated that more than 9 million people have no one to rely on to bail them out of this shortfall crisis.

He said: "The government have created this situation and have no adequate response. The previously rock solid final salary pension schemes are now on shaky ground as the decision to leave the EU has raised doubt over the security of people in DB schemes."

Mr Blackford added 11 million members of final salary pension schemes have been promised guaranteed returns but this all depends on there being enough money to pay for it.

He told the audience the state pension was also vulnerable because of Brexit, as the Treasury in a leaked document has warned of the dangers of gross domestic product growth from Britain's decision to leave the EU.

Mr Blackford added if the UK's GDP turns out to be substantially lower than those predicted pre-Brexit as the Office for Budget Responsibility has now confirmed then the new state pension may be overly burdensome. 

He said the result of the EU referendum also presents a real uncertain future for the 400,000 UK pensioners living in EU countries regarding their state pension.

He said: "UK state pensioners resident in the EU receive annual increases to their state pension. Elsewhere the UK state pension is only uprated if there is a so-called reciprocal social agreement providing this.

"We believe it is morally unjust and totally unfair for the government to strip any overseas pensioner of their right to equal state pension. The state pension after all is a right, not a privilege, and if you’ve paid national insurance you should be entitled to it, irrespective of where you choose to live."

Speaking earlier in the day at the same event on the topic of the implications on pensions for Brexit, Con Keating, head of research at insurance group Brighton Rock said: "Europeans are adamant we are getting hard Brexit whether we like it or not."