It was pensions wot won it. That was the view of many commentators after Scots voted against independence in 2014.
Days earlier, ex-PM Gordon Brown had warned that an independent Scotland would put pensions at risk. And in the privacy of the polling booth, while younger voters gambled with a Yes vote, older voters plumped for the status quo.
Now the EU referendum looms, and many voters across the UK and beyond want to know how a Brexit could affect their hard-earned cash.
Younger voters need their pension savings to grow. Older voters cashing in their pensions need to make sure they can get a good deal that sets them up for retirement. And pensioners who retired abroad need to know what happens to their income.
We look at the main issues affecting pensions and what both the Brexiteers and Remainders say about them.
The risk to our savings
During our working lives, we are encouraged by the Government to save money into a pension. This is a special savings account, which is usually invested on our behalf.
While bosses used to promise a certain fixed pension on retirement – known as a defined benefit pension – most of us toilers now have to save into a defined contribution pension.
In short, this means that if there’s a financial crash and the value of our pension investments plummet, we’re left to pick up the pieces.
So for anyone still saving into a pension, the biggest threat from Brexit is a period of financial instability.
Thangam Debbonaire, Labour MP for Bristol West, said: “Leaving Europe would cause serious damage to our economy, affecting the pension funds on which millions of Britons rely.
“The head of Standard Life has said leaving would be disastrous. Equities and gilt markets would be hit, and the pound would fall, making private pensions worth less.”
It’s certainly true that fund managers are pulling out of UK shares – suggesting they are worried about Brexit wiping millions off their investments.
How important this is, though, does depend how old you are. If you’ve got 40 years of work ahead of you, Brexit could look as remote as the financial shocks of the 1970s look now.
On the other hand, if you’re nearing retirement, this could knock some stuffing out of your savings and you may not have time to get it back.
Cashing in on retirement
When you can finally cash in your pension from the age of 55, most people will try to set up some kind of regular income for the future.
The simplest way to do this is to use your savings to buy an annuity – a promise of a regular income for the rest of your life.
And for those trying to buy one immediately after a Brexit, there could be some good news.
Annuity rates are linked to the rates of fixed income investments like bonds. If the Bank of England was forced to hike interest rates in the wake of a Brexit, this could make annuity deals look a lot more appetising.
“We could see a rise in interest rates, and gilt and bond yields, and that could lead to an increase in annuity rates,” said Tom McPhail, Hargreaves Lansdown head of retirement policy.
But this could also be a Catch-22 situation, because a big financial shock could also wipe the value off your savings in the first place.
McPhail said: “If your pension has shrunk as a result of the Leave vote, you might have less money to buy an annuity in the first place.”
Annuity rates are rubbish, and those hunting for a good deal have little to lose in the case of a Brexit.
Still, voting to quit the EU for that reason alone is a bit of a stretch. There’s no guarantee interest rates will rise, and you’re putting your pension savings at risk.
You also have much more freedom now to delay buying an annuity or avoid them altogether.
Britain’s army of retirees rely on a combination of two income streams – private annuities and the state pension.
The state pension is guaranteed to keep rising, but it is also a prime target for political meddling.
The Government controls the state pension, and over the past few years it has been relatively generous with a promise to keep this rising by at least 2.5% a year.
At the same time, it has infuriated women born in the 1950s by delaying the age of the retirement.
Brexiteer MP and former Work and Pensions minister Iain Duncan Smith says leaving the EU is the only way to control what happens next.
He said: “After an aborted pensions power grab in 2013, EU politicians have signalled further plans to gain control of the UK’s pension system.
“Unless we take back control, unelected eurocrats and EU judges will be deciding policies affecting your pension.”
By contrast, retirees who have private annuities agreed a fixed income at the start. But while they don’t have to worry about politicians, they might have to worry about inflation.
The more prices rise, the less they can buy with a fixed income.
McPhail said this is the “critical question” for pensioners: “What will be the impact of leaving on the economy and inflation?”
The state pension is never going to be free of political meddling, so it’s up to voters whether they trust the EU or the UK’s main political parties to protect their interests more.
While it’s impossible to predict what would happen after a Brexit, today’s prices are based on a situation where we have free trade with the EU, and if that agreement collapsed, prices are likely to rise.
Brits who decided to spend their golden years in the sunshine have the same worries as pensioners in the UK, and then a few more.
IDS has dismissed the “scare stories” that retirees in the EU will be stranded: “State pensions are payable to British citizens who retire overseas, regardless of EU membership.”
But while bronzed retirees might still be able to get their state pension in Marbella, they may find they can’t buy quite as many ice-creams as before.
The pound has been crashing in recent months, and it could fall more.
McPhail said: “There is a broad expectation that in the short-term at least we would probably see a drop in sterling.
“For people who retired abroad this could mean any income they received from the UK would be less.”
Overseas retirees might also be denied access to local health and other services that are guaranteed to fellow EU members, in the event of a vote to leave.
One of the hazards of living abroad with a UK pension is that its value can go up and down. British pensioners may have experienced this before. Either way, it’s worth budgeting for a reduced income in the next few months.
British pensioners abroad may wish to look at the bigger picture, as the EU currently guarantees their right to permanent residence, visa-free travel and more.
Original article taken from The Mirror