British expats in the European Union will continue to get annual increases in the state pension and healthcare rights are also protected, the Government has confirmed today.
However, those moving there after 2020 might see pension payments frozen unless a post-Brexit deal is struck, This is Money can reveal.
The withdrawal agreement under which the UK leaves the EU on January 31 provides certainty on future state pension rises for more than half a million current expats.
They will be reassured after being informed last autumn that after Brexit their state pensions would be uprated annually until 2023, but after that decisions would depend on whether reciprocal arrangements with the EU are in place.
State pension: Existing EU expats will continue to get annual increases, and so will people who move there before the end of 2020
People who move to EU countries between now and the end of 2020 will get the same guarantee that state pension increases for UK pensioners – of at least 2.5 per cent a year under the current triple lock system – will apply to them too.
The same goes for people living in Switzerland, and countries which are in the European Economic Area but not the EU – Iceland, Liechtenstein and Norway.
But it means people who move to the EU or the countries above after 2020 might end up in the same boat as the 550,000 retirees around the world whose state pensions are currently frozen.
If you move to the ‘wrong’ country, whatever amount the state pension is set at when you leave is what you will continue to get throughout retirement, unless you move back to the UK.
This affects people living in certain countries, such as Canada, India and Australia, but not in others, including the US, Philippines and Israel. See the box below.
Whether post-2020 expats to the EU get their state pension uprated depends on negotiations during the transition period – the next phase of Brexit after January 31.
This could mean a big rush of people speeding up plans to retire to the EU, and the risk of some future expats unwittingly missing out by moving too late, unless another deal is done.
Meanwhile, Hugh Elliott, Her Majesty’s Ambassador to Spain, has stated in a video posted on social media network Facebook today: ‘UK state pensioners will continue to have lifelong healthcare as long as they remain living in Spain and this also applies to residents who claim the UK state pension in the future.’
Presumably, this will also be the case for expats living in other EU countries.
Former Pensions Minister Ros Altmann welcomed the news that existing EU expats and those who move there before the end of this year will see their increases protected.
‘A few months ago, the Department for Work and Pensions warned that expat British pensioners in other European countries might lose annual increases to their state pensions if Britain left the EU without a deal,’ she says.
‘It committed to paying the annual increases for three years after a no-deal Brexit but gave no guarantees after that. These people’s fears of having their pensions frozen can now be allayed.
‘I hope the Government will quickly make sure these people know the good news that those already living in Europe can relax, as they will receive increases on their state pensions for life.
‘This protection of state pension uprating will also apply during the transition period.’
But she warns: ‘The withdrawal agreement does not cover those who retire to Europe after 2020: The Government says it is aiming to agree reciprocal arrangements with the EU for the next phase of our departure.
‘But if it fails to do so by year-end, and the implementation period is not extended, future expats could see their state pensions frozen.’
Lynne Pilcher, 62, an expat in Spain: ‘The thought of their pension not going up was beginning to make people think about moving back to the UK’
Lady Altmann notes that many people live in one of the countries which do not have a formal reciprocal agreement – including Commonwealth nations such as South Africa, New Zealand and the Falkland Islands.
‘A major campaign on behalf of the frozen pensioners, who have lost all the court challenges on this issue, has tried for many years to achieve uprating, but successive Governments have consistently refused.
‘I am delighted that there is now protection for the 650,000 or so worried British expats living in European countries. I also hope that the next phase of Brexit will agree reciprocity by end 2020.
‘But, in order to give people a fair chance to protect themselves, the Government must explain the risk of frozen state pensions for future expats.’
Lynne Pilcher, 62, who lives in Oliva in the province of Valencia, Spain, welcomed the news as a relief.
‘A lot of people I know here are of pensionable age and it’s caused them stress.
‘The thought of their pension not going up was beginning to make people think about moving back to the UK, which would be a shame because they have made a new life here.’
Work and Pensions Secretary of State Thérèse Coffey said: ‘Delivering for UK citizens was at the core of this Government’s negotiations with the EU.
‘I welcome the fact that thousands of UK pensioners living abroad in the EU, EEA and Switzerland will benefit from receiving the same state pension as those in the UK as negotiated in the Withdrawal Agreement.
‘We have delivered on the promise we made to the British public to get Brexit done.
‘Now our focus is on grasping our new freedoms, including to set future benefit and immigrations rules that work in our best interest, and unleashing Britain’s potential.’
Will you get state pension rises if you retire abroad?
Some 550,000 British pensioners living overseas miss out on annual state pension hikes, while others get the usual increases received by retirees in the UK.
Expats to countries including Australia, New Zealand, Canada and India have their state pensions frozen from the date they arrived – a significant hit to their retirement finances.
It means some expats who retired when the basic rate was £67.50 a week in 2000 still get that, rather than the £129.20 now received by others who retired that year.
This is because the Government has struck individual deals with some countries but left around 150 others out in the cold.
Read more here about the frozen state pension trap, and see the full list of countries affected below.
Where are state pensions frozen? Whether an expat’s pension is frozen or not depends entirely on where they move (Source: International Consortium of British Pensioners)
Source: International Consortium of British Pensioners
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