UK MP Roger Gale, who has previously fought for expats’ rights to export UK benefits or to have a vote for life, is now fighting to keep uprated pensions for those in the EU.
It comes as Connexion has identified a pre-existing agreement on pensions between the UK and France, which may help argue against the freezing of expats’ pensions here even if no EU-wide agreement is made.
Sir Roger said: “There’s a danger that, depending on deals, when we finally leave, pensions in some countries could be frozen.
“Once Brexit Secretary David Davis is ready to receive information, as the MP who is taking this cause up on behalf of everybody I shall make the case that when they strike a deal they must strike one that’s fair.
“We, meaning we MPs who take an interest in expats and not just constituents at home, want to secure uprated pensions and exportable benefits for all UK citizens in the EU.”
He added: “The All-Party Group on Frozen Pensions, which I chair, has up to now been dealing with frozen pensions in Canada, Australia etc. and that will to have to be broadened for EU countries – which may or may not mean all of them.
“The UK might have to have 27 reciprocal agreements. Obviously, most particularly we need deals with France and Spain.
“It will be part of a package of negotiations but my job will be to try to make sure this is not overlooked. Which is why I asked a question on it at Prime Minister’s Question Time. I wanted to put the marker down, that UK citizens in the EU have paid their taxes and should have rights.” During Question Time the then prime minister David Cameron said officials would examine possible Brexit scenarios and work out what they meant for expats so as to “give these people certainty about their future”.
The Director of the International Consortium of British Pensioners (pensionjustice. org), John Markham, said there were more than half a million Britons with frozen pensions – including his own, which has been left at £265 a month since 1998.
Colleague Sheila Telford said there were ‘tragic’ cases in their membership. “One man is caught between abandoning his wife with dementia and returning to the UK because, at 91 he can no longer manage,” she said.
Mr Markham, who lives in Canada, said a minority of expats were now returning due to rising living costs where they lived.
The consortium argues this is not in the UK’s interest, because they will place a strain on benefits and the NHS. He added: “Our battle is that freezing is illegal because all pensioners paid National Insurance, which should have been a contract with the government – and we are treated unequally. The UK is the only OECD state doing this.”
Negotiations are ongoing but they are currently arguing for annual uprating to start now, and not be backdated, because of the high cost of the latter to the UK which the government is not keen to meet.
The campaign group would be happy to represent EU-based pensioners if they wish to join, he said. However he felt it possible those in France would be protected as the UK had a previous social security agreement with France before the UK joined the EEC.
Connexion asked the UK’s Department of Work and Pensions if there was such an agreement including payment and uprating of state pensions. A spokeswoman confirmed such an agreement does exist, though it has “largely been overtaken by the European regulations” and they “cannot speculate on how our exit from the EU may impact on such agreements”.
A House of Commons Library paper on frozen pensions states: “The UK entered into reciprocal agreements with France, Italy, Switzerland, the Netherlands and Luxembourg, which provided for payment of retirement pension in the countries concerned. Upratings were paid.”
The Franco-British agreement, dated 1956, is still shown on French legal documentation site Légifrance and was not officially annulled.
Legal experts could not confirm it would automatically return if EU protections fell away but the head of the French international social security advisory body Cleiss said “it may be envisaged to reactivate it” if there was no EU-wide agreement and if it was not replaced by a similar new agreement.
So, while this document may not guarantee uprated pensions post-Brexit, if the UK did freeze pensions here it would be treating pensioners more harshly than before the UK joined the EEC and more harshly than in non-EU countries with social security agreements which have continued to operate.
‘Frozen pensioncould mean lossof at least £50,000’
If the previous Franco-British agreement (left) is not re-activated and a replacement is not enacted, UK state pensions for expats in France are likely to be frozen following Brexit, as is the case in many non-EU countries.
For Britons taking the pension for the first time this year, this would be equal to a loss of at least £50,000 (€59,000) over 20 years, says a senior analyst at the investment firm AJ Bell, Tom Selby.
His calculation is based on this year’s new £155/week ‘single tier’ pension and results from the effects of losing a minimum 2.5% increase per year. UK state pensions have a ‘triple-lock’, rising annually in proportion to earnings, prices, or (at least) 2.5%.
“It’s the power of compound interest,” Mr Selby said. “You have something that looks small – 2.5% – but over years becomes
enormous. For many people who have a pension already under the old, means-tested, ‘Second State Pension’ system, it may well be more than £50,000,” he said.
In many countries UK pensions are frozen at the amount when a pensioner leaves, or that taken when the pensioner starts to claim at state pension age if they are already abroad.
This applies unless the UK has a social security agreement with the country agreeing to uprating. These often date to post-Second World War years.
The UK has not signed one since 1981 and the list looks arbitrary – the US, but not Canada; the Philippines, but not New Zealand or Australia.
Mr Selby said: “The government cites cost, saying it would rather spend its social security money on pensioners in the UK, but it does seem unfair. So far, British leaders have not made any promises, so it will depend on what happens next.
“I think it’s quite unlikely the UK will want a single deal with the whole of Europe, so the second option will be going round negotiating with each state.”
The fact that the UK Treasury warned before the vote of a drop in revenue of €36bn a year by 2030 in the event of a ‘Canadastyle’
series of bilateral agreements may not bode well.
The UK remaining in the EEA would resolve the problem, but may not be an option.
