MoneyTalk
Good news on post-Brexit pension
rises for UK citizens in Spain
UK citizens living in Spain will continue to see rises in their
state pensions after Brexit. This welcome reassurance comes
from the UK-based Pensions and Lifetime Savings Association
(PLSA) in a briefing on Brexit.
PLSA expert James Walsh explained: “The UK and EU have
agreed that the UK will continue paying and uprating state
pensions to UK citizens living in European Union (EU)
countries after Brexit – and vice versa. This means, for
example, that UK pensioners living in Spain will continue to
get the same annual inflation increases they would have got in
the UK. The same will apply to Spanish pensioners resident in
Britain.”
Walsh added that people yet to retire will also benefit from this
continuation of current arrangements. This arrangement
currently covers all EU countries plus those of the European
Economic Area (EEA – Norway, Iceland and Lichtenstein) and
Switzerland.
PLSA’s analysis is based on the August edition of the Joint
technical note on the comparison of EU-UK positions on
citizens’ rights, a document published jointly by the UK and
EU. The agreement was reached some weeks ago, as the July
edition of the same bulletin also shows this as one of the Brexit
issues that has been settled.
The document also makes it clear that there is a new
agreement on so-called ‘aggregation’ of pension rights for
people who have paid national insurance contributions while
working abroad.
“The latest update shows that the UK and EU have now agreed
to maintain the current arrangement,” Walsh explained. “A UK
citizen who spent some years working in Germany [or Spain]
will still have those years count towards their state pension
entitlement; the current arrangements for sharing the costs
between the various governments will continue. This
arrangement applies to people who are already taking their
state pension and will also apply for those who are yet to
retire.”
Commenting on how likely is this to happen, Walsh added:
“Although the whole Brexit deal will have to be approved by
the UK Parliament, by EU national governments, and by the
European Parliament, it is highly unlikely that these issues will
be a sticking point. The fact they have been agreed so early in
the process indicates they are seen as uncontroversial, which
will come as a relief to pensioners across the EU.”
He conceded that it is possible that the whole Brexit deal might
founder because of failure to agree on more difficult issues.
However, even if the UK leaves the EU in March 2019 with no
deal, the EU regulations in this area would have been copied
into UK law under the European Union (Withdrawal) Bill
which has been going through the UK Parliament – assuming
this passes into law. “So the state pension arrangements would
continue unless the UK government decides otherwise,” Walsh
said.
Although this part of the Brexit negotiations is about state
pensions, the deal must protect workplace pensions as well, as
these form a key element of many people’s incomes in
retirement, Walsh added: “It is crucial that the final agreement
does not leave UK pension schemes exposed to any future EU
rules on the valuation and funding of pension schemes, as
these would make it far more difficult to run schemes and
would probably lead to lower pensions.”