However, what the ABI perhaps failed to sufficiently communicate was that only a small fraction of products would potentially be affected. This is why it is good to now hear further reassurance on the issue, with the EU regulatory body, the European Insurance and Occupational Pensions Authority (EIOPA) saying that all insurance contracts concluded before 30 March of this year will be valid even in the event of a no-deal Brexit. This means that the small minority of British expats who had legitimate concerns about their expat pension income can be certain they will continue to receive payments. Furthermore, after the 30 March cut-off, providers will be prevented from making changes to cross-border insurance contracts.
Evans, who is director general at the ABI said, “This is sensible guidance which helps reduce legal uncertainty over paying some insurance contracts post-Brexit.”
“It is particularly important that UK citizens who bought pensions in the UK but now live in the EU have the extra reassurance this provides. Allowing contracts signed before Brexit to run off and extra time for insurers to transfer portfolios into the EU27 are also pragmatic decisions which we welcome.
“However, while this guidance reduces uncertainty, it does not eradicate it as all EU27 individual regulators must implement it in the same way.”
Expat State Pensions Concern
Meanwhile, the former pensions minister Baroness Ros Altmann says that a no-deal Brexit presents a risk to the value of state pensions for British expats as there will be a reliance on the host countries reciprocating in order to have pensions uprated.
Altmann questions whether EEA countries would consider it a priority when there are 190,000 UK pensioners living in Spain, France and Ireland alone, but only around 5,500 EEA pensioners living in the UK. And this disparity is particularly pronounced in the case of Britain and Spain; there are 70,000 British expat pensioners living in Spain, but only 62 of their Spanish counterparts in Britain.
“Such imbalances clearly put any reciprocal arrangements at risk and leave British pensioners exposed to significant losses, which were never explained by the Leave campaigns or party manifestos,” said Baroness Altman.
Although Baroness Altman is an important voice on the issue it is worth remembering that at the turn of the year the government stated its intention to uprate the state pension across the whole of the EU in 2019/20.
Expat Pensions Advice Through Brexit and Beyond
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This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
Moving overseas is exciting. The idea of making a fresh start in an exotic location is generally a cause for optimism and joyfulness, and for many becoming an expat will bring a positive outlook for the future.
It’s hardly a new revelation to state that Brexit has caused uncertainty for British expats. Until the EU and British government reach a final agreement in Brussels, the lives of many expatriates are certainly in a state of limbo.