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UK to pay £8.4bn pensions bill in EU divorce settlement

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UK to pay £8.4bn pensions bill in EU divorce settlement

The UK is on the hook to pay £8.4 billion towards European Union pension costs after Brexit, according to the Office for Budget Responsibility (OBR).

The Budget watchdog estimated the UK’s liability for funding the pensions of EU civil servants post Brexit.

In its Economic and Fiscal outlook paper published today, the OBR put the figure at €9.5 billion (£8.4 billion) out of a total EU pension scheme liability of €76.7 billion (£68 billion), a figure which extends up to 2064.

However, while the billions will be added to the UK’s divorce bill, the OBR said it is not clear when the bill will have to be settled.

‘Pension liabilities add €9.5 billion to the total settlement cost. These liabilities will fall due over a very long period, so there is clearly uncertainty over how and when this or future governments would decide to meet the estimated cost.’

This figure does not include liabilities associated with the ‘joint sickness and insurance scheme’, which the OBR is still a subject to negotiations, and some smaller pension schemes.

The OBR also pointed out differences between its estimate and the figure stated in the EU’s annual accounts, which put the total liability at €67.2 billion, of which €6.7 billion is the joint sickness and insurance scheme, ‘implying a UK share of €8.3 billion’

In conjunction with the National Audit Office the OBR said it expects to refine this estimate in future work.

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