Brexit
Could Leave British Expat Pensioners 50k Worse Off
Brits retiring and moving to Spain and to other EU member states are able to claim
the same incremental pension they would receive if they stayed in the UK.
Things could look very different if the Brexit goes through.
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Its looking more obvious that leaving the EU
will have consequences
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The UK will hold a vote on if they will leave the EU on the 23rd of June and, should they leave, they will have to strike up new agreements with countries that house British retirees.
The policy that gives British pensioners an incremental increase is an EU-wide policy. The policy says that pensions increase by either wage or price inflation, whichever is higher, with a minimum increase of 2.5%.
If the UK fails to secure an agreement like this with other countries such as Spain, then British expats will find themselves in the same situation that is found in Canada, Australia, and New Zealand. In these countries the state pension is frozen and stays at the rate it was when they left.
As a result a Brit moving to Spain or an EU country after the Brexit could find themselves up to £50,000 over 20 years according to calculations by AJ Bell. A 65 year-old retiring today would receive £155.65 per week, but 20 years without a rise on that could easily mount up.
AJ Bell warned that a Brexit would cast the aspirations of people wanting to retire in Europe, or already retired in Europe, into doubt. Some have faith that the government will be able to protect British expats if the Brexit goes ahead, but it should be noted that the UK has yet to set up a deal like this with a non-EU country since 1982, mostly because of how much it would cost.
While people who are not expats themselves may see this as one of the many EU-led costs to taxpayers, there is no doubt that anyone who will benefit from this agreement should chose to vote remain so that their pension is protected.
Ross Altmann, the Minster for Pensions, said that it was important to clarify this matter and make it a part of negotiating the UK’s exit if the votes go that way.
If the UK does vote to leave the EU there will still be a two year time period where EU treaties still apply, so there is likely going to be a lot of political back and forth in that time. Shailesh Vara, the Parliamentary under-secretary of State for Justice said that the Conservative Party don’t have any plans to change the current policy wherein British pensioners abroad have their pension payments frozen.
She added that a Brexit would leave a lot of pensioners who have worked hard to secure their future and enjoy their retirement in the dark. With the current rules the UK and Europe enjoy what is called the “triple lock” system that ensures their state pension is protected.
While the deadline for registering to vote by post has passed it is still possible for expats who have lived abroad for less than 15 years to register a proxy who can vote on their behalf at the upcoming referendum.
