Up to 10 million immigrants could be needed in the UK by 2025 to ensure pensioners can continue to receive £80 a week from the basic state pension, research claims.
Researchers at Cass Business School in London said the likely course of the pensions crisis pointed to the need to work longer, save more and allow in more immigrants who will pay sufficient tax to keep the system afloat.
The most gloomy scenario – that productivity and real wages will not increase between now and 2025, and so generate more money for paying pensions – says 10 million migrants would be needed if we did not work longer, pay higher national insurance contributions and kept living longer.
The basis of the problem, the Cass research said, is that we are living longer while birth rates have fallen. In 1990, there were four workers to every one pensioner. By 2030, there are expected to be nearly two pensioners for every five workers.
“The UK is facing some tough decisions in terms of state pensions provision,” said Cass’s Lee Mayhew. “We can increase our work force via migration, we can work longer or we can increase contribution payments – even if we do this it only keeps the current state pension system stable until 2030.”
The report echoes the recent finding of the interim Turner report into the pensions crisis, which put the state of British savings deficit into a stark light: we need to save an extra £57bn – either through state or private pension schemes – or work longer before retirement.