The Government has said that there is no certainty that the UK state pension will continue to be uprated each year for the hundreds of thousands of UK citizens living in EU countries if the UK crashes out of Europe with no deal.
Currently, UK citizens who have retired to EU countries are entitled to receive annual inflation increases to their UK state pension, in line with pensioners receiving payments in the UK. This ‘triple lock’, as it is called, means that their state pension rises in line with the highest of average earnings, inflation or 2.5 per cent.
The Department for Work & Pensions (DWP) stated recently that the UK leaving the EU would not affect entitlement to the UK state pension and that it was committed to uprating across the EU in 2019 and 2020. However, beyond that period, uprating would depend on whether the EU reciprocates.
The statement says: “We would wish to continue uprating pensions beyond that but would take decisions in light of whether, as we would hope and expect, reciprocal arrangements with the EU are in place.”
It goes on to say that UK citizens living in any of the 27 EU states and receiving an annuity or personal pension from a UK firm should check whether their payments would continue under a no deal scenario.
If no deal is struck, this could mean that around 470,000 UK nationals living in the bloc face having their pensions frozen until individual reciprocal deals are struck with individual EU member states.
To find out more about how Kirk Newsholme Financial Planning can help, please contact Richard Leonard at Richard.Leonard@knfp.co.uk or by calling 0113 204 4215.