Potential Pensions Bombshell as Brexit puts State Pensions for British pensioners in the EU at risk
- As UK has decided to uprate State Pensions in EU this April, even if there is No Deal, they could agree to uprate all frozen pensions in other countries if they wish to solve this ongoing scandal.
- Government says State Pensions will only be uprated if host countries reciprocate but is abandoning that rule for Brexit.
- 340,000 British pensioners would need uprating, while hardly any EU citizens retire to the UK.
British pensioners could lose their pension increases if there is No Deal: A little-known side effect of leaving the EU could be to strip British pensioners of their annual state pension increases. Those who have retired to live in sunnier EU climes (especially Spain and France) are particularly at risk. Those Governments would need to agree to reciprocate uprating.
UK Government says it will only pay pension increases on a reciprocal basis: The Government says it will only pay increases to British pensioners living in EU countries if each country agrees to reciprocal arrangements. This could add to the ‘frozen pension’ problem that already affects around half a million UK pensioners living in many non-EU countries which refuse such reciprocity. A long-running campaign to persuade the UK to increase State Pensions in these countries (including Canada, Australia, New Zealand, Singapore) has never succeeded. In a series of court cases, the Government’s refusal has consistently been upheld. It is only legally required to uprate if there are reciprocal arrangements. This puts the pensions of those who have retired to Europe at risk if there is No Deal, without such arrangements in place.
Government recently promised to uprate all British pensioners living in the EU for 2019-20, even if there is No Deal: The DWP has recently announced it will still pay increases to UK pensioners living in Europe for 2019-20, even if there is no reciprocal agreement in place due to a No Deal Brexit. This can give some comfort for the coming year but the pension uprating in April 2020 may be withheld from pensioners who retired to EU countries. Even with the Prime Minister’s Withdrawal Agreement and Political Declaration, the risk of frozen pensions remains, because no future relationship is agreed and signed. The likelihood of other countries making demands in exchange for reciprocal uprating could put pensioners at risk. But the decision to pay the forthcoming uprating also undermines the long-standing policy on frozen pensions.
Decision shows Government could choose to end the plight of all frozen pensioners: Paying pension increases for 2019-20, even if no reciprocal agreements are in place, sets a precedent showing that the Government can, if it chooses, pay pension increases in countries without requiring reciprocity. To continue paying only to those living in the EEA or EU even if there is No Deal would be difficult to justify. Either the Government drops its insistence that it will only uprate pensions in countries which do the same, or it could decide to pay uprating regardless of where pensioners choose to live. This could, therefore, pave the way to finally address the frozen pension scandal by agreeing to pay all pension increases, wherever the person lives.
Britain ‘exports’ pensioners to the EU and very few are ‘imported’ here: Many more Brits choose to retire to countries like Spain and France, while hardly any of their citizens choose to retire over here. For example, evidence to the Commons Brexit Select Committee confirmed there are 70,000 British people receiving State Pensions in Spain, but only 62 Spanish pensioners in the UK. Such imbalances leave British pensioners exposed to risks and potential losses from Brexit which were never explained by the Leave campaigns or party manifestos.
Another example of unexplained, hidden consequences of leaving the EU: Such risks to people’s State Pensions were never made clear. Failing to explain risks properly contravenes normal pension rules, but somehow when it comes to Brexit, many rules of normal practice are overridden. People need to know what all the implications are. Of course it would have been better to explain these in advance to voters. What will people feel when they find out more of these hidden consequences of Brexit? We shall see.
11 thoughts on “Potential Pensions Bombshell as Brexit puts State Pensions for British pensioners in the EU at risk”
Excellent article about a pertinent, practical, problem that requires addressing but will likely be overlooked.
It’s our monies not theirs to decide what happens with it. we paid in over 40 years there are people who have never contributed that get more and will get more, how is this fair?
Pension uprating for U.K. pensioners living in the EU was enshrined in EU law as a result of the free movement of people. Now that the U.K. is leaving the EU and the need to comply with the EU legislation on free movement is no longer required the requirement uprate pensions no longer exist. We have been constantly reminded by the U.K. government through many FOI request from the DWP that there is no requirement for reciprocal agreements when considering pension uprating ,which in the first place is a matter which can be adopted by a simple change in UK legislation.
What I don’t understand is why the EU would be faced with a huge bill by paying the pensions of U.K. retirees living in the EU. U.K. pensions along with uprating is paid to U.K. retirees living in the EU from the international payments section of DWP in Newcastle in the U.K. So why is there a need for reciprocal agreements? Surely all retired EU citizens living in the U.K. have a similar payment scheme?
The numbers are way off. According to the DWP’s own database, there are 106,000 UK pensioners living in Spain, 132,000 living in Ireland and 67,000 living in France, so, the problem is bigger than is stated.
Source: https://stat-xplore.dwp.gov.uk/webapi/jsf/tableView/tableView.xhtml
From where do you get this nonsense? I presume it’s as a result of comments made by Baroness Altmann.
EU countries do not pay U.K. pensions and the U.K. does not pay EU pensions therefore there is no imbalance in costs due to there being more U.K. pensioners in the EU than vice-versa. Each country pays its own pensioners with or without a reciprocal agreement.
It is entirely up to the U.K. government whether or not they grant the annual increase to pensioners overseas and the U.K. government uses the excuse of reciprocal agreements as a cynical money saving exercise and, in doing so, deprives over half a million U.K. pensioners (known as ‘frozen pensioners’) of the annual increase.
If the U.K. government is consistent, it will add the 470,000 U.K. pensioners living in the EU after Brexit to the 520,000 pensioners already deprived of increases. If, as usual, it’s not consistent, and do not freeze U.K. pensions in the EU, then they should do what they always should have done, annually increase the pensions of all U.K. pensioners regardless of where they live.
Let’s not forget the expats in Australia and Canada who already have to contend with frozen pensions. Not paying uprated pensions to people who have paid into the UK system their entire life is actual robbery and our government should be named and shamed.
It is ridiculous and dishonourable that the UK government freezes any of its pensioners’ pensions, irrespective of where they live, because their claimed excuse of affordability is not supported by the Government Actuary’s latest Jan 2019 annual report. This report shows the NI fund balance is forecast at end March 2019 to be £27 Billion; that is about £10 Billion above the Actuary’s recommended prudential balance. Moreover the balance is forecast to increase annually by £34.4 Billions by March 2024 to £61.7 . The cost to uprate the 4% of the UK’s pensioners whose pensions are frozen, is claimed by Government advisers to be just £600 Million. Many MPs are unaware of these figures and so take biased prejudiced disingenuous advice from dishonourable public servants and vote against changes to this outrageous unique pension practice, the UK being the only OECD nation which takes this selective and unfair approach to its pension payments .
This is outrageous. Why should it matter where I’m living? I have as much right to a cost of living increase regardless of where I’m residing. I am ashamed to be British and hate the uncompassionate culture that underpins it. I feel as though I’m being punished in some way for wanting to live my twilight years in warmth
I can’t afford to live on the paltry UK pension NOW and find this whole thing insulting as well as most unfair.
Agree with previous comments submitted. Does anyone know whether Public Sector or Civil Service Pensions are affected by these so called reciprocal agreements. Are they bound by the same rules that govern State Pensions and so frozen in certain countries?