EU Referendum Caused £935bn Pension Hole in UK
For those over 65 years old, the decision to stay outside of the European Union had cost them about £935bn in pension deficits.
Among those above the retirement age voted 60% to stay outside the EU during the referendum. For successive age categories, 60% is the highest number of voters positive to exit the EU.
According to a 12,356-respondent survey of referendum voters by Lord Ashcroft, the same voters dependent on defined benefit pension for their monthly income would lose their monthly income.
From £830bn, the UK’s deficit has increased by £900bn overnight after the EU referendum.
Record lows in gilt yields sprung from investors changing their favour from stocks to other assets favouring safety. This had the pension industry push up their pension liabilities up to an all-time high of £2.3 trillion on July 1.
“The gyrations in UK pension deficits are eye-watering. But one of the biggest factors that will determine whether or not pensions are paid to scheme members in full will be the health of the sponsoring company post Brexit,” Patrick Bloomfield, partner at Hymans Robertson, said.
Ros Altman, the former pensions minister, warned pensions could be under threat from the economic turmoil following UK’s vote to leave the EU.
“Good pensions depend on a good economy. Markets don’t like uncertainty, and we are clearly in unchartered territory,” Altmann said at an event in London.
“I hope we will get the political turmoil settled soon and do what we really need to be doing -which is making good policy for everyone in the country – who hopefully one day will be a pensioner if they aren’t one already,” she added.