The UK government is sending out letters to retirees in Europe eligible for the UK state pension to provide them with information about what will happen if there is a no-deal Brexit.
The Department for Work and Pensions (DWP) said that, in this possible scenario, the annual uprating of the stipend will continue for three years.
This means that their pension will go up by at least 2.5% a year, worth up to £200 ($246, €225) per person, annually.
This will be an automatic process and expats will not need to do anything.
Preparations complete
Work and pensions secretary Thérèse Coffey said: “Pensioners in Europe who have paid into the system for years deserve peace of mind over their future finances.
“Not only are we providing much needed reassurance for hundreds of thousands of retirees, we’re ensuring we are fully prepared for leaving the EU on 31 October [2019].
“No matter the circumstances of Brexit, we’ve made sure that pensioners do not need to take any action to continue receiving their hard-earned state pension.”
The government added that, during those three years, it will try to negotiate an agreement with the EU to make sure the uprating continues.
Uncertainty still there
Jon Greer, head of retirement policy at Quilter, said the letter “will be cold comfort for many and simply serve to extend the period of uncertainty”.
“It remains to be seen whether the government will be able to negotiate a new arrangement to ensure this policy continues. At worst, it could result in state pensions being used as a bargaining tool in wider negotiations.
“With many people living into their nineties and beyond, a three year guarantee will be woefully inadequate and only serve to increase their anxiety.”
Chilling treatment
The issue of pension uprating for British expat has been a hot topic for some time, as it is only selectively applied.
Brits living in Australian and Canada, for instance, do not receive the same treatment as those living in the EU, as they have seen their pensions ‘frozen’ at the rate present when they left the UK.
In October last year, the DWP confirmed to International Adviser that it would cost £500m to reverse the freezing of the British state pension for expats.
