A rise in excess pensioner deaths from coronavirus has seen the Treasury pay £1.5 billion less in state pensions.
According to the Office for Budget Responsibility (OBR) of the more than 144,000 deaths related to Covid-19 since the start of the pandemic, most have been in people aged over 65, many of whom will have been receiving the state pension.
The OBR estimated that will partly cause the Government's pensioner spending to fall by £600 million in 2020/21 and £900 million in 2021/22, relative to its March 2020 forecast.
In its Economic and Fiscal Outlook report published alongside the 2021 Budget, it said: "Excess deaths due to the pandemic have also reduced the number of people receiving pensions relative to the assumptions underpinning our March 2020 forecast.
“Indeed, with virus-related deaths rising sharply again in recent months, we have revised up the number of excess pensioner-age deaths in 2020-21 from 90,000 in our November forecast to around 100,000 in this one.”
It cautions that the revision “may appear small given the severity of the current wave”, but says the lockdown “brought in to control the coronavirus has also dramatically reduced the number of influenza deaths this winter relative to a normal year”.
It added that its forecast also assumes “excess deaths” in 2021-22, which “lower pensioner spending by £0.6 billion in 2020-21 and by £0.9 billion in 2021-22 relative to our March 2020 forecast”.
The OBR also found that coronavirus deaths will contribute to the rise in inheritance tax receipts.
It said receipts have been "revised down substantially relative to our pre-pandemic forecast thanks to lower equity prices and lower house prices” and that “the effect of these on growth in the value of estates more than offsets the small lift to receipts due to the increase in deaths this year”.