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Brexit negotiations still ignoring UK pensions passporting plight
| Published: | 13 Aug at 6 PM |
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Tens of thousands of retired British expats living in Europe could lose access to their pensions should a hard Brexit result.
According to experts working in the financial service industry, the possibility of being denied access to regular private pension payments isn’t fake news as it’s perfectly possible. Director General of the Association of British Insurers trade body, Huw Evans has already warned British lawmakers about the illegality of paying pensions to expat policyholders living in the EU should a hard Brexit become a reality in just under eight months’ time. The issue isn’t new as it’s been mooted since June 2016, but it’s been ignored by parliament and the British negotiating team ever since.
For those unaware of the reality of the threat, the elephant in the room is ‘passporting’, the arrangement which allows UK-based insurers to operate in EU member states. Passporting will no longer apply once Britain finally leaves the EU and, if this system isn’t replaced, it will be illegal to continue any operations within the EU. This includes paying out regular private pension amounts to UK retirees living in EU member states. The exclusion will apply to the vast majority of private sector pension schemes put in place by employers or financial advisors, and will also impact insurer-run occupational pension schemes.
Employers running pension schemes themselves won’t be affected and will be able to continue paying benefits as well as paying salaries to staff working in various EU countries. The ban will also affect those planning to retire in European member states as well as expats already there. Official figures show around 247,000 British retirees living in various EU nations, a good number of whom will lose out. There is yet time for some kind of deal to be worked out between the two sides, with the above a worst-case scenario at a time when the opposing sides are moving towards some kind of equivalence regime containing many passporting rights. A number of financial service companies are establishing EU-based subsidiaries able to trade as well as paying out pensions.
However, there isn’t much else in the way of a last resort except for expat retirees to open UK bank accounts, have their pensions paid in and transfer the cash to a local foreign account or draw it out at an ATM. The problem with this is the high number of British banks which are now disallowing British accounts for expat applicants as well as closing down their services for existing current account clients living overseas. Older expats who’ve sold their British homes to finance their lives in EU countries are likely to be met with refusals, leaving them struggling to manage on dwindling capital until a working solution is found.
According to experts working in the financial service industry, the possibility of being denied access to regular private pension payments isn’t fake news as it’s perfectly possible. Director General of the Association of British Insurers trade body, Huw Evans has already warned British lawmakers about the illegality of paying pensions to expat policyholders living in the EU should a hard Brexit become a reality in just under eight months’ time. The issue isn’t new as it’s been mooted since June 2016, but it’s been ignored by parliament and the British negotiating team ever since.
For those unaware of the reality of the threat, the elephant in the room is ‘passporting’, the arrangement which allows UK-based insurers to operate in EU member states. Passporting will no longer apply once Britain finally leaves the EU and, if this system isn’t replaced, it will be illegal to continue any operations within the EU. This includes paying out regular private pension amounts to UK retirees living in EU member states. The exclusion will apply to the vast majority of private sector pension schemes put in place by employers or financial advisors, and will also impact insurer-run occupational pension schemes.
Employers running pension schemes themselves won’t be affected and will be able to continue paying benefits as well as paying salaries to staff working in various EU countries. The ban will also affect those planning to retire in European member states as well as expats already there. Official figures show around 247,000 British retirees living in various EU nations, a good number of whom will lose out. There is yet time for some kind of deal to be worked out between the two sides, with the above a worst-case scenario at a time when the opposing sides are moving towards some kind of equivalence regime containing many passporting rights. A number of financial service companies are establishing EU-based subsidiaries able to trade as well as paying out pensions.
However, there isn’t much else in the way of a last resort except for expat retirees to open UK bank accounts, have their pensions paid in and transfer the cash to a local foreign account or draw it out at an ATM. The problem with this is the high number of British banks which are now disallowing British accounts for expat applicants as well as closing down their services for existing current account clients living overseas. Older expats who’ve sold their British homes to finance their lives in EU countries are likely to be met with refusals, leaving them struggling to manage on dwindling capital until a working solution is found.
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