Soltalk October 2017 | Page 37

MoneyTalk Good news on post-Brexit pension rises for UK citizens in Spain UK citizens living in Spain will continue to see rises in their state pensions after Brexit. This welcome reassurance comes from the UK-based Pensions and Lifetime Savings Association (PLSA) in a briefing on Brexit. PLSA expert James Walsh explained: “The UK and EU have agreed that the UK will continue paying and uprating state pensions to UK citizens living in European Union (EU) countries after Brexit – and vice versa. This means, for example, that UK pensioners living in Spain will continue to get the same annual inflation increases they would have got in the UK. The same will apply to Spanish pensioners resident in Britain.” Walsh added that people yet to retire will also benefit from this continuation of current arrangements. This arrangement currently covers all EU countries plus those of the European Economic Area (EEA – Norway, Iceland and Lichtenstein) and Switzerland. PLSA’s analysis is based on the August edition of the Joint technical note on the comparison of EU-UK positions on citizens’ rights, a document published jointly by the UK and EU. The agreement was reached some weeks ago, as the July edition of the same bulletin also shows this as one of the Brexit issues that has been settled. The document also makes it clear that there is a new agreement on so-called ‘aggregation’ of pension rights for people who have paid national insurance contributions while working abroad. “The latest update shows that the UK and EU have now agreed to maintain the current arrangement,” Walsh explained. “A UK citizen who spent some years working in Germany [or Spain] will still have those years count towards their state pension entitlement; the current arrangements for sharing the costs between the various governments will continue. This arrangement applies to people who are already taking their state pension and will also apply for those who are yet to retire.” Commenting on how likely is this to happen, Walsh added: “Although the whole Brexit deal will have to be approved by the UK Parliament, by EU national governments, and by the European Parliament, it is highly unlikely that these issues will be a sticking point. The fact they have been agreed so early in the process indicates they are seen as uncontroversial, which will come as a relief to pensioners across the EU.” He conceded that it is possible that the whole Brexit deal might founder because of failure to agree on more difficult issues. However, even if the UK leaves the EU in March 2019 with no deal, the EU regulations in this area would have been copied into UK law under the European Union (Withdrawal) Bill which has been going through the UK Parliament – assuming this passes into law. “So the state pension arrangements would continue unless the UK government decides otherwise,” Walsh said. Although this part of the Brexit negotiations is about state pensions, the deal must protect workplace pensions as well, as these form a key element of many people’s incomes in retirement, Walsh added: “It is crucial that the final agreement does not leave UK pension schemes exposed to any future EU rules on the valuation and funding of pension schemes, as these would make it far more difficult to run schemes and would probably lead to lower pensions.”