UK nationals living in the EU will only get access to increased state pensions if the EU reciprocates.
In an 11-page policy paper out today (December 6) entitled 'Citizens’ Rights', Brexit Secretary Stephen Barclay said the government planned to continue to preserve the state pension rights of UK nationals living in the EU.
But he warned should the EU fail to offer the same deal back, pensioners living in any of the 27 EU states will not benefit from any state pension increases.
This scenario would result in about 470,000 UK nationals living in the EU having their pensions frozen, until individual reciprocal deals are stuck with individual EU member states.
Currently expats' pensions are uprated according to the pensions ‘triple-lock’, meaning their state pension rises in line with the highest of average earnings, inflation or 2.5 per cent.
Tom Selby, senior analyst at AJ Bell, said: "Today’s statement from the Brexit Secretary lays bare the uncertainty facing almost half a million UK nationals who live in the EU and are currently eligible for valuable state pension increases.
"If a deal with the EU as a whole cannot be reached then the UK will likely have to negotiate reciprocal deals with each of the 27 member states. This could be a painfully drawn out process with no guarantee of success."
But Michelle Cracknell said: "A no deal Brexit may not cause as much of a problem in relation to state pensions. We have a mix of agreements with other countries that are well understood. For example, we have a reciprocal agreement on state pensions with the USA, yet we don’t with Australia."
There are approximately 1 million UK citizens living in the EU, compared to 3 million EU citizens living in the UK.
In the event of a deal the government has confirmed both groups would continue to receive the same state pension rights as they currently enjoy.