According to the group British in Europe, about 20% of the 1.24 million British citizens living elsewhere in the European Union are retired.
Many are concerned about the prospect of a no-deal Brexit after the 31 October deadline and what it means for their pensions.
The UK government says it is preparing diligently to mitigate the impacts of a no-deal, though it has not published any comprehensive plan for doing so.
Mark Carney, governor of the Bank of England, said in a letter to the Treasury committee that the worst case scenario for no-deal Brexit is now “less severe” because of the preparations.
But there remains a number of risks no-deal Brexit poses to British pensioners living in the European Union and wider European Economic Area. Here are some of them.
Sterling’s fall in value
The pound’s value has sunk since the referendum back in 2016. It was above €1.30 just before the referendum, but is currently at €1.10.
It will likely plummet further in the event of no deal—possibly to lower than parity.
For British pensioners receiving their income from the UK, that means less money to spend after pounds are converted into euros, and could affect the sustainability of their expat lifestyles.
Transactions more expensive because of new costs
Because Britain would crash out of the single market, European financial institutions may start to impose non-EEA costs on transactions from their British counterparts.
To send, spend or receive money could cost more if you are using a UK account, credit or debit card, which could impact the incomes of expat pensioners.
Banks are making arrangements—but check with yours
“Your firm should have made plans to make sure you can still get your insurance or personal pension or annuity, even if the UK leaves the EU without a deal,” says the UK government website.
“Your firm should contact you if it needs to make any changes to your product or the way it provides it. However, if you have any concerns about whether you might be affected, you should contact your firm.”
Put simply: No-deal will change things, but your bank should have planned for that already, so check with them what will happen to your pension.
New taxes on pensions
Presently, the transfer of money from UK pension savings to schemes overseas are subject to a 25% tax by the UK government—unless they are to countries in the EEA.
It is not clear if no-deal Brexit, which entails leaving the EU and EEA, would mean pensioners in Europe will face a transfer tax, but it is a possibility. If not immediately then perhaps in the future.
Your state pension will still be uprated for three years
The Department for Work and Pensions announced that Britons in the EEA receiving their state pensions would still under no-deal Brexit be entitled to the annual “triple lock” uprating—the highest of 2.5%, the rate of inflation or average earnings growth—in 2020, 2021 and 2022.
But what happens after 2022 is anybody’s guess at the moment.