Expats paid retirement income from a UK pension may see their cash lifeline cut off if Prime Minister Theresa May fails to thrash out a financial Brexit deal with the EU.
British financial providers can operate in Europe with a ‘passport’ licence that allows a company approved in one European country to do business in another EU country automatically.
But pension providers could lose this right on Brexit in March 2019 if the UK leaves the single market unless a new passporting arrangement comes into force.
Trade body the Association of British Insurers says financial providers will have to stop paying pension customers if their passports are revoked or the companies will risk prosecution for breaking the law.
Passporting worries for pension firms
Parliamentary Treasury Committee chair Nicky Morgan MP has written to Chancellor Phillip Hammond with her concerns about how cross-border pensions will be managed after Brexit.
Director General of the ABI, Huw Evans, said: “Unless negotiations over how to handle long-standing contracts are part of the first phase of Brexit negotiations, there may not be time to resolve them effectively.
“We are pleased that Nicky Morgan has raised this important issue with the chancellor. This is a shared challenge for the EU and UK and a vital issue for millions of our customers.
“We have been urging all sides to address it as a matter of urgency and agree on a reciprocal solution. Without a resolution, insurers will face a choice between breaking their promise to customers or risk breaking the law. It must not come to this.”
Expats affected by pension passporting
The issue will not impact expats in the EU with QROPS pensions as the providers are already based in the EU and should have the appropriate licences to carry on business.
But thousands of expats in the EU paid by UK pension firms and EU expats in the UK paid by EU financial providers will be hit if a new arrangement is not put in place by Brexit.
State pensions paid to British or EU expats are unaffected, as are British expats with UK pensions or QROPS living outside the Eu.
