Pension uncertainty for British expats reigns in the wake of the EU referendum
One of the many questions that have arisen out of Britain’s decision to vote in favour of leaving the European Union is what will happen to the pensions of British expats who reside in the European Economic Area (EEA)?
There are 472,000 people living in the EEA that currently receive a UK pension. Under the ‘triple lock’ pension promise that was introduced back in 2010, there is a guarantee that the basic state pension will continue to increase every year by whichever is highest – inflation, growth in earnings or a flat 2.5 per cent. ‘Triple lock’ is a mechanism that applies to both British pensioners in the UK and on the continent.
In the run-up to the EU referendum, David Cameron said the government might not be able to protect spending on pensions should Britain choose to leave the European Union.
The prime minister added that Brexit might cause a ‘black hole’ in the public finances and one of the possible consequences of leaving could be a threat to the ‘triple lock’ on state pensions.
Following the referendum, chancellor George Osborne sought to reassure the public that it is ‘business as usual’ and there will be no need for an ‘emergency budget’.
However, there have been warnings from the Department for Work and Pensions that leaving the EU would represent a ‘leap in the dark’ for British pensioners across Europe.
As for those weighing up the benefits, or otherwise, of leaving the UK to retire to mainland Europe, the picture is equally unclear for the time being.
The chairman of the International Consortium of British Pensioners, John Markham, has said, “the prospect of a frozen pension will now be of significant concern to anyone who has retired or would like to retire to the continent.”
For now, the only thing we can say for certain is that leaving the EU has caused a high degree of uncertainty.