State Pension  

Govt reveals state pension plans for expats after Brexit

Govt reveals state pension plans for expats after Brexit

The government has guaranteed it will increase the state pension for UK expats in the EU for the next three years in the event of a no-deal Brexit, which has been criticised by a former pensions minister.

The Department for Work and Pensions announced yesterday (September 1) it had committed to increase the pension benefit paid to those living in the EU each year until March 2023, according to the triple lock rules.

Amber Rudd, the secretary of state for Work and Pensions, said the government was working hard to prepare for leaving the EU on October 31, whether that was with a deal or without one.

She said: “We will be fully ready for Brexit, and are leaving in a way that protects the interests of citizens here and in EU member states.

“This guarantee will provide reassurance to the hundreds of thousands of people living in the EU who receive a UK state pension that their pensions will continue to rise significantly each year, however we leave.”

During this three-year period, the UK government plans to negotiate a new arrangement with the EU to ensure uprating continues, the DWP stated.

But Steve Webb, former pensions minister and director of policy at Royal London, has criticised the announcement.

He said: “This attempt to reassure British pensioners living in the EU will actually have the opposite effect.

“They have received repeated assurances that their pensions would be increased each year regardless of the outcome of the Brexit process. Today’s announcement of a time-limited guarantee will be deeply worrying to British ex-pats living in the EU.

“If the UK leaves the EU on bad terms with the rest of the Europe there is no guarantee that a new uprating arrangement will be reached, and today’s statement offers no assurance to pensioners that annual increases will continue after that point.”

Under the triple lock system, the state pension increases each year in line with whichever is the highest: consumer price inflation, average earnings growth or 2.5 per cent.

The same applies to expat pensioners living in certain countries, such as the US, all EU countries, Barbados, Bermuda and Israel.

But pensioners living in countries such as Australia, Canada, New Zealand and South Africa have had their state pension frozen at the value it was in the year they left the UK.

Pensions rose by 2.6 per cent in 2019-20 in line with average earnings.

According to data from the Office for National Statistics, there are currently 900,000 Brits living abroad in the EU. Of this, 220,000 are aged 65 or more.

The DWP has established a new dedicated call centre team based in Newcastle to answer any questions from those affected.

maria.espadinha@ft.com

What do you think about the issues raised by this story? Email us on fa.letters@ft.com to let us know.