Osborne warns leaving EU would hurt pensions

Britain's Chancellor of the Exchequer George Osborne delivers a speech on the economic impact of the UK leaving the European Union, at a B&Q Store Support Office in Chandler's Ford, Britain, May 23, 2016.
REUTERS/DANIEL LEAL OLIVAS/POOL
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British pensioners would be hundreds of pounds a year worse off if the country left the European Union, Chancellor George Osborne said late on Thursday in the government's latest warning on the costs of voting to leave the bloc.

On Monday Prime Minister David Cameron said Britain would fall into recession and inflation would spike if it voted to leave in a referendum on June 23, and last week Osborne warned that a Brexit could knock 10 percent off house prices.

Opinion polls suggest older voters are more likely to vote than younger ones, and more likely to want to leave the EU. Osborne said new analysis from Britain's finance ministry showed they would be hurt by higher inflation and lower asset prices.

"It's important that pensioners understand what's at stake for them too on June 23," Osborne said.

Someone who relied solely on the state pension would be about 140 pounds ($205) a year worse off, due to higher inflation, while a 50-year-old on average earnings and modest savings would be 223-335 pounds a year poorer when he or she retired, the finance ministry said.

Britain's state pension rises by whichever is highest out of inflation, wage growth or a 2.5 percent fixed rate, so in normal circumstances it increases faster than prices, which currently are rising by just 0.3 percent a year.

But Britain's finance ministry forecast inflation would be about 2.5 percent higher than normal in the two years after voting to leave the EU, meaning pensions would be unlikely to rise in real terms as they do typically.

Campaigners who want Britain to leave the EU have disputed previous government analyses, saying they provided nothing on the upside of leaving the bloc, nor on the potential negatives caused by a crisis in the euro zone.

($1 = 0.6826 pounds)

(Reporting by David Milliken; Editing by Catherine Evans)

New by; http://uk.reuters.com/article/uk-britain-eu-pensions-funds-idUKKCN0YI0KT

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