State pension increases will continue for UK citizens living in EU

The UK and EU have agreed that the UK will continue paying and uprating state pensions to UK citizens living in EU countries after Brexit and vice versa, according to the Pensions Lifetime Savings Association (PLSA).

This means that British pensioners living in Spain, for example, will continue to get the same annual inflation increases to their pension as they would have got in the UK. The same will apply to Spanish pensioners resident in Britain.

James Walsh, policy lead at the PLSA, says: ‘Those yet to retire will also benefit from this continuation of the current arrangements. As at present, this arrangement will cover all EU countries plus those of the European Economic Area (EEA – Norway, Iceland and Lichtenstein) and Switzerland.’

Further, he adds it was previously unclear whether national insurance contributions made while British citizens are working abroad will continue to count towards state pension entitlement.

‘The latest update shows that the UK and EU have now agreed to maintain the current arrangement. So a UK citizen who spent some years working in Germany 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.

Walsh points out that while any Brexit deal will have to be approved by the UK Parliament, EU national governments and the European Parliament, the fact they have been resolved indicates they are seen as uncontroversial.

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He concludes: ‘Of course, 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 will already have been copied into UK law under the European Union (Withdrawal) Bill now before Parliament, assuming this passes into law. So the state pension arrangements would continue unless the Government decides otherwise.’

Walsh cites the August edition of the ‘Joint technical note on the comparison of EU-UK positions on citizens’ rights’, published jointly by the UK and EU. He adds: ‘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.’

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