UK government pension fund short on cash

Would-be expat retirees hoping to fund a few luxuries from their UK state pensions are being warned the government’s pension piggy bank is almost empty.

Ever increasing numbers of Brits seem desperate to emigrate to a comfortable retirement in a laid-back, weather-friendly, non-Brexit country, using the cash from selling their homes plus the UK state pension to ensure financial security. According to pensions experts, this current crop of retirees may be the last as the government’s state pension fund is close to running out.

Research by government number-crunchers reports the National Insurance Fund is on its last legs, and will be empty by 2032 unless national insurance contributions paid by workers are allowed to increase considerably. The Government Actuary’s Department has estimated an at least five per cent increase will be needed in order to continue paying out, with another alternative being a law change lifting a current cap of 17 per cent on levels of pensions and benefits directly paid from income tax revenues. Whichever solution is chosen, one thing’s for certain – it’s the taxpayer who will eventually foot the bill.

One senior analyst believes the government has tough decisions to make as regards continuing with the present system, adding the latest report is a brutal reminder as regards the fiscal reality of supporting Britain’s ageing population. There are no politically popular options to solve the crisis, with increasing the pensionable age, reducing the value of the already meagre state pension, hiking national insurance contributions or committing funds from another Treasury source all unattractive moves.

At present, UK citizens retiring after April 2016 will receive £164.35 a week, starting from April this year. Those who retired before April 2016 will only get £125.95 a week, a cruel difference as the older one gets the more likely one’s needs become more expensive, especially in the case of medical necessities. For retirees in this category, Brexit is a double whammy as it’s set to raise inflation at the same time as free movement is forbidden to cash-strapped pensioners trapped in the UK.