Pension reforms could cost £5 billion

Saturday, November 5, 2016

The pension reforms introduced by George Osborne could cost £5 billion and push house prices up in the long term, according to the Office for Budget Responsibility (OBR).

The report examined the projected economic effects of a range of the ex-chancellor’s reforms, including the pension freedoms and savings products such as the Help to Buy ISA.

The effect these reforms could collectively have on the public finances are:
  • ŸŸthe initial effect will be positive with a peak gain of £2.3 billion in 2018/19 ŸŸ
  • the effect turns negative in 2021/22 ŸŸ
  • the net cost continues to rise, eventually reaching £5 billion in 2034/35.
Expressed as a share of GDP, the net costs in 2034/35 represent 0.1% of GDP. If that rate of growth were to continue at a steady pace, the OBR estimates the cost would be 3.7% of GDP to public sector net debt over 50 years.