Brexit risk to private pensions - what you can do
Fears have been raised today over dangers to British expatriates’ private pensions after Brexit – however there are simple steps people can take now to minimise the risk.
Speaking to the House of Commons' Brexit select committee, Association of British Insurers chief Huw Evans said that in the event of a ‘no deal’ Brexit next year private pension firms and insurers in the UK would be left unsure if they may legally pay pensions or claims to customers in some EU countries such as France.
“This is not the case in the UK, but in many countries of the EU if you are not authorised to transact business there, then it is illegal to pay a claim,” he said. At present authorisation comes via the ‘European passporting’ system, however this is expected to end for British financial companies. That means there “a perfectly plausible risk” that pensioners in certain countries could not be paid, Mr Evans said.
If there is a deal including a transition period until the end of 2020, the problem should be put off – however it would arise after March 29,2019 if there is not.
Connexion has addressed this topic several times before and we would stress that even in this worst-case scenario the insurers could pay the money into a British bank account – it is therefore a good idea for anyone concerned to make sure that they have a UK-based account from which they could then make transfers to France.
At present under an EU directive, which is applied in the UK, people living in other EU countries like France have the right to open a ‘basic bank account’.
In the UK there have been moves led by the Bank of England to reassure citizens of other EU states living there that they will be able to receive their private pensions from abroad after Brexit, however so far there is no guarantee across the EU.
Mr Evans said: “This is sortable, but it requires regulatory cooperation and political agreement to do so and up till now the European Commission and European regulator EIOPA have refused to engage in discussions because of the overall state of the negotiations.”
Recognition of UK services in the EU would not be automatic under the UK’s current proposals for the future EU/UK relationship which prioritise maintaining alignment in rules for trade in goods.
An ABI spokeswoman told Connexion: “Some UK firms will be taking their own steps to address this, such as establishing authorised entities in Europe but this will not be a practical solution for all”.
