- 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.