In a debate held by the Exiting the European Union Committee on 24 July, Huw Evans, director general of the Association of British Insurers, raised serious concerns about UK pension payments if there is a hard-Brexit.
He said several EU nations currently do not have legal frameworks in place to deal with UK pension payments in a post-Brexit world.
He said the Bank of England has estimated that there are about 38 million pension and life policyholders who will be affected by this issue.
“This is highly material, and there is the related issue that in future, if UK citizens retire to an EU country and they have an insurance-based pension which is paid to them in the domestic bank account of the current country in which they reside, that may also be deemed illegal if there is not an arrangement found for this route,” Evans said.
He said the increasingly likelihood of a “no deal” Brexit has kept the issue in a “legal limbo” that needs to be urgently addressed.
“We did a survey, working with a city law firm, of eight different EU countries and found eight different regimes, so we are not saying this is a blanket risk across all 27.
“But it is a classic issue of the type that requires regulators, with political blessing, to sort the issue out themselves,” Evans said.
Qrops concerns
Chris Lean, a chartered financial planner with European adviser network OpesFidelio, said it is well-known that qualifying recognised overseas pension schemes (Qrops) can pay into non-UK accounts.
“However, there has to be a solution to this before March as there will be many expats worried about how to get their monthly pension payments.
“In the meantime, I hope that this does not lead to this issue becoming a sales aid for knee-jerk and inappropriate Qrops sales,” Lean said.
James Tilley says:
Seems that many UK State pensioners are worried that, like us retired in the Commonwealth they may soon have their UK State pensions frozen and lose value as they age. Tough!.
It’s about time the UK fell in line with every other OECD nation on this issue of freezing some pensioners pensions and that all pensions are paid fairly and equally, like the UK pensions paid to UK pensioners resident in the USA, Israel, Turkey, the Philippines and a few Commonwealth countries.
The UK’s pension policy is unfair and treating some of its pensioners unequally is contrary to the Rule of Law. Moreover it is also contrary to the Commonwealth Charter, “we are implacably opposed to all forms of discrimination” for the UK’s frozen pension practice is discriminatory.
Darren Beech says:
Perhaps Mr Davies needs to quit with his dramatising and scaremongering. There is already a framework for dealing with overseas investment and income payments, they are called Double Taxation Agreements. Maybe the UK will need a couple more.