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Iain Duncan Smith: Remain vote could cost pensioners 'dramatic sums of money'

Published 27/05/2016

Pensioners could lose "dramatic sums of money" if Britain remains in the EU, Iain Duncan Smith claimed as he dismissed Government assurances it had seen off the threat of potentially damaging Brussels regulations.

The former work and pensions secretary said EU directives on harmonisation and solvency could still become law without UK support.

His former ministerial colleague, Pensions Minister Baroness Altmann, admitted the EU proposals could have damaged British pensions but insisted "the threat has now been dealt with" after negotiations.

Instead, "every serious economic forecast" predicts an economic shock if Britain leaves the EU and a resultant hit to retirement funds, she said.

The pair clashed after the Treasury released analysis claiming that pensioners would lose thousands of pounds in the event of Brexit.

The analysis concluded that the value of total assets held by all those aged 65 and over would drop by up to £300 billion as a result of the economic shocks of Brexit.

Older voters are more likely to turn out at elections and polling has indicated they are more likely to back a Leave vote, making them a key target for both sides ahead of the June 23 referendum.

Mr Duncan Smith claimed a planned EU solvency directive is "coming down the tracks" and could cost British pensioners £400 billion.

He told BBC Radio 4's Today programme: "The point about this is the Government says 'oh well that's stopped', no it hasn't.

"They postponed that directive a year and a half ago when they said we would take further consideration before bringing it forward."

He went on: "The solvency directive will come back again, that is certain, and that will cost British pensioners a huge sum of money."

The former Cabinet minister also claimed that EU plans to harmonise regulation of occupational pensions were still on the table and could be passed without British support under qualified majority voting rules.

"What does that mean? It means if you go to the Council of Ministers and you are only one nation alone, even if you have a couple, you cannot stop this," he said.

"That means the only way to save pensions is to vote to leave the European Union because then it won't apply to the UK."

He added: "Both of those (regulations) could cost pensioners dramatic sums of money."

Lady Altmann admitted that EU proposals could have damaged pensions but insisted that now "it's not happening".

The Pensions Minister told the programme: "What we have managed to do by being inside the EU is that we have moved the EU decisions in our favour so that actually we've moved away from many of the proposals that might have been damaging for our pension funds.

"Most of what has been threatened, people kept saying this is going to be bad for pensions, it's going to destroy pensions, it's not happening.

"That threat has now been dealt with."

Asked again if the threat was over, she replied: "Yes, as far as I know. That's the point, if we get more proposals that might damage our pensions industry, that might damage our financial services industry, then we are at the table to make decisions that can protect ourselves."

While Mr Duncan Smith dismissed the Treasury analysis as an "outrageous" attempt to "scare pensioners", Lady Altmann insisted an economic shock caused by Brexit would damage retirement funds.

"I'm not just talking about the Government, I'm talking about every major economic forecaster," she said.

"A weaker economy means lower wages, lower profits, lower dividends, lower investment returns and lower pension contributions as well as lower pension fund investments.

"This isn't some kind of conspiracy, it's a consensus here."

Campaigning in Solihull in the West Midlands, Chancellor George Osborne said the Treasury analysis made clear that pensioners would be worse off if Britain was outside the EU.

"You'd see the value of the basic state pension go down in real terms. You'd see the value of your things like your family home and your savings fall, and if you're saving for your retirement you'd have less money when you do retire," he said.

"I don't think that is a price worth paying. I don't think it's worth taking that leap in the dark. I don't think it is worth the damage that leaving the EU would do to people in retirement and people looking forward to retirement."

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