The fall in earnings growth revealed in the Autumn Statement will have a knock-on effect on the state pension, which will leave pensioners on average £100 a year worse off, researchers at Open Britain have discovered in the small print of the Office for Budget Responsibility’s (OBR) report.
The rise in the state pension is determined by the ‘triple-lock’, which sees it rise each year by whichever is highest of 2.5%; CPI inflation; or average earnings growth. The OBR forecasts that the highest of these by 2019 will be earnings growth. However, they also calculate that weaker earnings growth will mean £1.3 billion less spent on pensions in 2020. On average, that would mean £105 a year less for each of the country’s 12.3 million pensioners.
Commenting, Norman Lamb MP, leading supporter of the Open Britain campaign, said:
“The slowdown in Britain’s post-Brexit economy will have a real impact on people’s incomes, including pensioners.
“The slower growth in average earnings means less money for the state pension because of the triple lock.
“No one voted to make pensioners £100 a year worse off and if the Government wants to avoid making the situation worse, they must reject a hard and destructive Brexit, which will make us all poorer.”
Commenting, Joe Carberry, co-Executive Director of Open Britain, said:
“Those who voted for Brexit seem to be bearing the brunt of its impact. Voters were deceived about the implications of a vote to leave, but the reality is starting to emerge.
“To protect people’s living standards it is essential that we now protect an open economy, which means continuing to trade within the Single Market, our largest trading partner.”
Notes to editors
In the section headed ‘changes related to the referendum and exiting the EU’, the OBR puts lower earnings growth down to Brexit. It says this has an impact on triple lock on pensions:
“There are some offsetting effects on spending. In particular, lower average earnings growth reduces state pensions spending. The ‘triple lock’ on uprating means that the basic state pension rises by the highest of 2.5 per cent, CPI inflation or average earnings growth. In our central forecast, earnings growth is the highest of these three from 2019-20 onwards. Weaker earnings growth thus reduces state pension spending by £1.3 billion in 2020-21.”
In 2015, there were over 12,300,000 people eligible for the state pension:
Calculation: £1,300,000,000/12,312,000 = £105.59 per pensioner