Expat pension payments after Brexit Day may stop abruptly if Britain and the EU fail to agree a mutual deal, says Chancellor Phillip Hammond.
Speaking to MPS at a Treasury Select Committee grilling in Westminster, Hammond said that expats should not worry about their pensions if Britain and the EU agree a deal along the lines of Prime Minister Theresa May’s recent Florence speech.
In that speech, she asked the EU for a two-year transition after the March 19, 2019 Brexit Day to allow for a smooth changeover of financial and legal responsibilities between the UK and Europe.
She also agreed to carry on paying towards the EU budget so the UK could stay in the single market.
“There was a shared interest for both the UK and EU that they avoid outcomes that impose unnecessary costs and disruption on individuals and businesses as the UK leaves the EU,” he said.
Brexit no deal risks
His comments followed an open letter from the committee chair Nicky Morgan last week asking him to clear up how pensions would be paid from the UK to EU after Brexit.
She was concerned that Britain would be outside the EU, where laws would not allow non-EU financial providers to pay expat pensioners in Europe.
Hammond told the committee that he was aware of the danger and the financial problems Brexit could pose to expat pensioners.
“The government is alive to the risk that the UK’s withdrawal could in some cases create legal uncertainties as to the status of existing cross-border insurance, pension and other financial services contracts sold under passporting arrangements,” he told the committee.
Transition will aid expats
“The government has been actively engaging with the financial services sector – including the insurance and pensions industry – to understand how the UK’s exit from the EU could impact financial services firms and their customers, including through the effect of withdrawal on existing contractual relationships.”
He went onto explain that the proposed transition would help expats.
“The government will negotiate a time-limited interim period, to provide certainty and avoid a cliff-edge for business and individuals during the transition from the current structures of membership to the new relationship,” he said.
“These arrangements should be designed to ensure that businesses do not face two sets of changes as we adjust from our current relationship with the EU to the deep and special partnership that we are seeking to secure.”