Retired British expats living in EU countries could lose access to their pensions should negotiations result in a hard Brexit.
Whilst a soft Brexit refers to remaining closely aligned with the EU, a hard Brexit rejects the idea of a close alignment. Instead, a hard Brexit is for those who want to escape the rules and regulations placed upon the UK by the EU, as well as leaving the single market and customs union.
Whilst many have deemed it fake news, financial industry experts have stated that being denied access to private pension payments could be a reality. The British government have been advised that paying pensions to expat policyholders living in the EU following a hard Brexit would be illegal come 29th March 2019. Despite this issue being flagged in June 2016 and covered again and again by experts, the British government and negotiating teams have failed to address it.
What is passporting?
The reason that the current method of enabling expats to receive their private British pension would be illegal in the future boils down to passporting. Passporting is a procedure that allows UK-based insurers to operate in EU member states to deliver British expats their private pensions.
Passporting will no longer apply once Britain leaves the EU. If an alternative isn’t negotiated or another arrangement put in place, then pension operations will cease for British expats as it will be illegal otherwise. A majority proportion of all private pension schemes will be impacted should this be the outcome.
Would employer pensions be affected?
British expats receiving a pension from a scheme set up by a previous employer will continue to get their pension. UK companies also paying staff in an EU country a salary will also be able to continue doing so regardless of a soft or hard Brexit.
Who will be affected?
There are around 247,000 British expats living in EU member nations and a large percentage of these will lose their pension following a hard Brexit. This will also affect any British national planning on retiring to an EU country.
However, it must be remembered that the above is a worst-case scenario. There is eight months to go before Brexit takes place which allows time for both sides to put a plan together in regard to passporting rights.
Financial advisors state that the last resort option would be for British expats to open a UK bank account, have their pension paid in, and then transfer the cash to their local foreign account.