UK expats to lose £50k from state pension following Brexit

News


12 May, 2016

UK expats to lose £50k from state pension following Brexit

UK expats living in Europe could lose up to £50,000 ($72,125, €63,372) from their state pension if Britain votes to leave the EU in the referendum on June 23.

It has been revealed that the change will affect 472,000 UK citizens, who receive ‘triple-locked’ pensions which that rise yearly in line with inflation, who have moved abroad to enjoy their retirement in the EU.

Tom Selby from AJ Bell, said, "Brexit would throw the position of expat pensioners, or those who wish to retire to Europe, into doubt".

Under the current structure, Britons retiring to a country in the EU will receive annual increases to their pensions to equal either wage, price inflation or 2.5%, whichever is the highest.

However, should voters decide Britain will leave the EEA when the EU referendum takes place next month, expats based in Europe might see their pension payments frozen as the UK would need to renegotiate contracts with individual EU countries for retirees to be eligible to the increases.

Failure to secure an agreement would mean a person aged 65 who is entitled to the £155.65 flat-rate state pension, would lose up to £50,000 in pension rises over 20 years.

Selby added, "It is worth noting the UK has not arranged a similar deal with a non-EU country since 1981. While some believe the government will be able to negotiate protections for expat pensioners in the event of a Brexit, it is worth noting the UK has not arranged a similar deal with a non-EU country since 1981, primarily due to the costs involved”.

The statistics come as British politicians get ready to discuss the issue in the House of Commons on Wednesday.

Previously, the UK government has confessed a lack of understanding on how British expats within the EU will be affected in the event of a Brexit vote in June.

Pensions minister Ros Altmann said, “There is uncertainty about how a vote to leave the EU could impact on access to pensioner benefits for UK pensioners living in other parts of Europe”.

He added, “We could only consider the detail of access to pensions and benefits for people in receipt of UK state pensions who are resident in Europe as part of the process for leaving the EU.”

In addition to the EEA, the UK currently has ‘bilateral agreements’, which permit the yearly increase in state pensions, with only a handful of other countries. These countries include the US, Barbados, Bermuda, Bosnia-Herzegovina, Jersey, Guernsey, the Isle of Man, Israel, Jamaica, Kosovo, Macedonia, Mauritius, Montenegro, the Philippines, Serbia, Turkey.

However, UK pensioners residing in Australia, Canada, New Zealand and South Africa, have had their state retirement pension frozen so that it is paid at the same rate as it was when they first became eligible, or the date they left the UK if they were already pensioners then.

Related News - Too few people understand new state pension