The British government will safeguard state pension uplifts for expats in Europe for three years after Brexit – with future rises dependent on negotiating a new agreement.
The hammer blow was meant to reassure state pensioners overseas, but has had the opposite effect.
Around 222,000 British expats live in the European Economic Area (EEA), together with up to 240,000 Europeans who are entitled to the UK state pension.
Under current rules, their state pensions are increased each year in line with the triple lock rise guaranteed to state pensioners in Britain.
What the triple lock means to state pension payments
The triple lock guarantees a minimum 2.5% increase in the state pension each year, unless average wage growth or a rise in the cost of living is higher – if it is, the payment goes up by more.
The figure depends on average wage increase statistics and the consumer price index, which is the official measure of inflation, in September each year.
The highest figure is taken for the triple lock state pension increase the following April.
What the minister says
Those outside the EEA receive no annual inflation increase unless the country where they live has a reciprocal agreement to pay state benefits with the UK.
They have also seen their spending power fall by around a fifth as the value of the Pound has collapsed over recent years.
Work and Pensions Secretary of State Amber Rudd said: “This government is working hard to prepare for leaving the EU on October 31, whatever the circumstances.
“We will be fully ready for Brexit, and are leaving in a way that protects the interests of citizens here and in EU member states.
“This guarantee will provide reassurance to the hundreds of thousands of people living in the EU who receive a UK state pension that their pensions will continue to rise significantly each year, however we leave.”
During the three-year guarantee period, the government intends to negotiate a new state pension deal with the EU that will see uprating continue.
What expats say
“This commitment will come as a vital temporary relief to all pensioners living in the EU. We have been pressing for this step all year as, until today, those pensioners faced having their pensions frozen next April, on top of their pensions having lost over a fifth of their value because of the fall in the pound since before the referendum. But it does not go far enough,” said Jeremy Morgan, a retired barrister living in Italy and vice-chair of the British in Europe Brexit campaign group.
“The UK is “almost unique in the EU in distinguishing between pensioners who are living in the country and those that are not.
“If you have worked all your life in the UK, it should be a basic entitlement and up to the individual to decide where they want to live without being penalised.
“These people paid their contributions and taxes to the UK, and then retired to the EU on the basis that their pension would at least be increased for inflation. To move the goalposts for this vulnerable group when it is too late for them to do anything about it is simply immoral.”
State pensions for EEA expats if there’s a no deal Brexit
The government has issued an announcement outlining what will happen to the payment of pensions and benefits if Britain leaves the Europe Union with no deal on October 31.
The state pension will still be paid as normal in EEA countries and Switzerland, with cost of living increases guaranteed until April 2022.
If the pension is paid by an EEA country or Switzerland, the government says check with appropriate authority to see what will happen after a no deal Brexit.
Workplace pensions, annuities and personal pensions paid by a UK provider should continue as normal.
The EEA countries are Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the UK.
Switzerland is neither an EU nor EEA member but is part of the single market – meaning Swiss nationals have the same rights to live and work in the UK as other EEA nationals and UK expats in Switzerland are treated as if they live in the EEA.
State pensions for expats in countries with a reciprocal agreement
Nothing changes if these countries are outside the EEA.
As the agreements are with governments of non-EU countries, Brexit does not affect them and the current deals should continue without interruption.
These countries are Barbados, Bermuda, Bosnia-Herzegovina, Jersey, Guernsey, the Isle of Man, Israel, Jamaica, Kosovo, Macedonia, Mauritius, Montenegro, the Philippines, Serbia, Turkey, and the USA.
State pensions for expats in countries outside the EEA with no reciprocal agreement
Nothing changes for these countries.
As with countries with reciprocal agreements, current arrangements with non-EEA countries stand, Brexit does not affect them and payments will continue as before Brexit.
For expats, that means state pension payments are frozen at the amount of the first payment.