British expats in Europe to receive state pension increases post-Brexit

Written by Talya Misiri

British pensioners living in other European Union states will continue to receive state pension uplifts in line with changes made in the UK after Brexit, it has been noted.

Following the EU Withdrawal Bill’s passing through the first Commons vote, there has been concerns as to how Brexit might impact on the state pension for UK citizens who are based in the EU.

Within the August edition of the Joint technical note on the comparison of EU-UK positions on citizens’ rights, published by the UK and EU, it has been noted that both have agreed that the UK will continue paying and uprating state pensions to UK citizens living in EU countries after Brexit and vice versa. This will include the same annual inflation increases for British citizens living in the UK and EU states.

Pensions and Lifetime Savings Association policy lead: engagement, EU and regulation James Walsh highlighted: “Those yet to retire will also benefit from this continuation of the current arrangements. As at present, this arrangement will cover all EU countries plus those of the European Economic Area (EEA – Norway, Iceland and Lichtenstein) and Switzerland.”

Furthermore, the technical note also addresses the fact that national insurance contributions made while working abroad will count towards state pension entitlement.

Walsh explained: “The latest update shows that the UK and EU have now agreed to maintain the current arrangement. So a UK citizen who spent some years working in Germany will still have those years count towards their state pension entitlement; the current arrangements for sharing the costs between the various governments will continue.

“This arrangement applies to people who are already taking their state pension and will also apply for those who are yet to retire.”

In addition to this, Walsh noted that while this note is part of the Brexit negotiations about the state pension, the deal must also protect workplace pensions. He emphasised that the final deal must not leave UK pension schemes “exposed to any future EU rules on valuation and funding” as this would make it much harder to govern and maintain schemes, and “would probably lead to lower pensions”, Walsh opined.

Considering the pension agreements amongst the entirety of the Brexit negotiations, Walsh continued: “Although the whole Brexit deal will have to be approved by the UK Parliament, by EU national governments and by the European Parliament, it is highly unlikely that these issues will be a sticking point. The fact they have been agreed so early in the process indicates they are seen as uncontroversial which will come as a relief to pensioners across the EU.

“Of course, it is possible that the whole Brexit deal might founder because of failure to agree on more difficult issues. However, even if the UK leaves the EU in March 2019 with no deal, the EU regulations in this area would have been copied into UK law under the European Union (Withdrawal) Bill now before Parliament – assuming this passes into law. So the state pension arrangements would continue unless the Government decides otherwise.”

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