UK Report Warns On EU Exit Pension Consequences

By Editorial 10 July, 2013

A research paper prepared by the UK Parliament’s Commons Library has outlined potential pension consequences for around 1.4m British expats living in other European Union countries should the UK choose to leave the EU.

The report, entitled Leaving the EU, is an overall assessment of what leaving the EU would mean for the UK and for British nationals. As regards pensions, it notes that EU withdrawal would see the end of long-standing provisions in EU law (also applying to the wider European Economic Area and Switzerland) to "co-ordinate" social security schemes. At the moment, an expat reaching retirement will make a claim for a State Pension in the country where he or she is living. However, there is no transfer of pension rights: rather, each Member State where the expat has worked or lived up to that point provides a pro-rata contribution based on agreed formulae. The report warns that withdrawal without alternative arrangements would mean that "UK nationals who had spent periods living and working abroad could have their pension rights significantly reduced."

It adds that current bilateral arrangements with particular countries are "far more limited in scope," and that no new agreements have been signed for many years. In cases where there is an imbalance between the number of UK expats in a particular country and the number of that country's nationals in the UK, it may not be possible to reach an agreement at all.

Further, EU legislation also applies to occupational pensions, allowing pension funds to manage occupational pension schemes for companies in another Member State and for European-wide companies to have only one pension fund across European subsidiaries, and to cross-border pension schemes. Withdrawal from the EU would remove a mechanism by which the funding of cross-border schemes is ensured, as well as pension protection in the case of employer insolvency.

The report cites Home Office figures estimating that in 2010 there were around 1.4m UK nationals resident in other EU Member States, of which 411,000 were in Spain, 397,000 in Ireland, 173,000 in France, and 155,000 in Germany.

UK Prime Minister David Cameron has promised that, should the Conservative Party win an outright majority in the next election, there will be a referendum on EU membership by the end of 2017 following a renegotiated "new settlement" for the UK. In the meantime, he has given his support to a private member's bill on a referendum, currently being introduced by Conservative MP James Wharton. In the most recent Ipsos MORI poll on the subject, conducted in November 2012, only 44 percent of respondents supported remaining in the EU, with 48 percent against.

Tags: United Kingdom | Agreements | European Union (EU) | Expats | Pensions | Working Abroad | Europe | Work | Working Abroad | Pensions | Working Abroad |


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