Osborne Warns Of Brexit Hit To Pensioners

Millions of pensioners could find themselves worse off if the UK quits the European Union, George Osborne will claim.

The analysis, released by the Treasury on Thursday night, suggests rising inflation, market turmoil and a fall in asset prices could wipe up to £300bn from the total assets held by the over-65s in the event of a severe market shock.

That level of shock would amount to a reduction of £32,000 off the average pensioner's wealth, the Chancellor has claimed. A more moderate shock could wipe £170bn from the value of assets of the over-65s, amounting to around £18,000.

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The Treasury also said state pensions could be hit by a vote to leave because the subsequent rise inflation would in turn erode the basic value of a state pension by between £137 to £142 a year in real terms, according to its analysis.

This is the third report issued by the Treasury warning on the risks of Brexit.

It (Other OTC: ITGL - news) was rushed out just two hours before the three-week "purdah" period - which blocks the government machine from releasing information about the referendum - to the fury of the Vote Leave camp.

Brexiteer ministers are angry at what they see as attempts by the Prime Minister and Chancellor to load the dice in their favour by using the machinery of government to peddle "pro-EU propaganda" to the public.

George Osborne said it was his "responsibility" to warn on the risks to people's jobs, livelihoods and living standards. "I couldn't recommend something that we know would put all that at risk."

Iain Duncan Smith said the Treasury report on pensions was "an outrageous attempt to do down people's pensions" and claimed the real threat to pensions was staying in the EU.

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He said: "The biggest threat to British pensions is the European Commission's proposals to undermine occupation pensions which the Government themselves have described as damaging and reckless."

The former cabinet minister also said the intervention was designed to divert attention away from figures showing net migration from the EU had reached 184,000.

Pro-Brexit ministers are preparing to ramp up their own attacks on No 10 and the Treasury in the coming days , as they once more set out the economic case for leaving the EU, hinged around wages and migration.

Senior Conservatives are plotting a push on the benefits of Brexit for British workers, and are expected to argue that the Chancellor's push for a national living wage will only serve to fuel higher levels of immigration to the UK and leave British workers fighting for jobs and access to public services.

Older voters are a key target group for both camps given that they are more likely to turn out at elections. They are also more likely to back Brexit, which is why Mr Osborne has them in his sights.

The Treasury sought to highlight the link between the wider economy and pension assets, pointing to a 10% fall in the value of such assets in the 1990 recesssion and a 15% drop in the financial crash of 2008.

The analysis suggests that someone aged over 65, with the median portfolio of housing and non-pension assets, could see their wealth drop by an estimated £18,000, or up to £32,000 in the severe shock scenario.

The report also suggested that an existing pensioner, with a defined contribution pot worth £60,000 could see their pension fund fall in value between £1,900 and £5,200 by next year.

Mr Osborne's commitment to the triple lock on the state pension means that pensioner payouts from government will rise every year by inflation, earnings growth or 2.5% - whichever is highest.

:: Iain Duncan Smith MP from the Out campaign will be on Sky News Sunrise at 8.30am.