Currently, any individual who retired to a country within the EEA (European Economic Area) has their state pension increased every year under the ‘triple-lock’ system. This means that retirees benefit from pensions rising by the higher of wage or price inflation, subject to a minimum of 2.5%. However, in the event of Brits voting to leave the EU, the UK could have to negotiate with each individual country within the EU to establish individual reciprocal agreements if annual state pension increases for expats were to remain.
If failure to reach an agreement with individual countries was the outcome, British expats could potentially suffer from frozen pension payments and annual increases could cease. This scenario is currently reflected in Australia, Canada and New Zealand, where British state pension payments to expats are already frozen.
Investigation done by investment shop AJ Bell suggests that for an individual aged 65, in receipt of the £155.65 flat rate state pension, the loss of annual increases would cost around £50,000 over 20 years. Tom Selby, senior analyst at AJ Bell states: “Brexit would throw the position of expat pensioners, or those who wish to retire to Europe, into doubt.”
“While some believe the Government will be able to negotiate protections for expat pensioners in the event of a Brexit, it is worth noting that the UK has not arranged a similar deal with a non-EU country since 1982, primarily because of the costs involved.”
Back in February Baroness Ros Altmann, the minister for pensions, said: “These questions would need to be answered as part of the process of negotiating the UK’s exit if there is a vote to leave.”
Frustrations are bubbling amongst expats living abroad, particularly those who have lived in a country for more than 15 years. Under current rules, expats who have lived away for the UK for this period of time are unable to vote in the referendum, despite a potential Brexit having potential significant impact on their lives.
Margaret Hales MBE is 69 and currently resides in Spain. The former academic and democratic issues campaigner comments: “You still remain in your heart British even if you may have emigrated, and to consequently deny a British citizen a vote in something that will fundamentally affect them is so undemocratic and unreasonable.”
London-born Harry Schindler, a 94-year-old WW2 veteran who helped liberate Rome, legally challenged the High Court as, due to his long-term residency in Italy, he is not allowed to vote in the referendum. The case was dismissed and it seems unlikely that the British government will move on this issue at this late stage.
83-year-old pensions campaigner Brian Cave, a retired a teacher living in France is worried about his future: “We just do not know what might happen if there’s a Brexit. If the Government started freezing the pension, if our health support ceased, even I would have to very seriously consider downsizing massively and moving back.”
Mr Cave explained that, despite expats living abroad, they are very much still connected to UK. Many have investments, pension income and tax connection for those who receive a public sector pension.
Harbouring the same concerns as many, he adds: “The people in Britain do not understand that we in Europe are so utterly dependent on Britain and large numbers of us have no vote in this thing.”
Under the current system. British pensioners in the both the UK and Europe benefit from the certainty of a basic state pension income protected through the triple lock system. A Brexit would be a daunting prospect for millions of pensioners who have worked hard all their lives and deserve security in their retirement.