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Update on Brexit and Pensions

Update on Brexit and Pensions

Brexit flags

A previous blog covered the potential impact of Brexit on the pensions of Prospect members who move between the UK and the rest of the EU during their careers or after they retire.

At the time the blog was written there was some uncertainty about whether there would be changes to how working in other member states counts towards eligibility for state pension entitlement.

As an EU member state, the UK must count years contributed towards other countries' social security systems when determining whether someone reaches the minimum threshold for qualifying for a UK state pension.

For example - there is a 10 year qualifying threshold for the UK state pension but if someone has worked in Denmark for 30 years before moving to work in the UK for 5 years then the contributions to the Danish system means that the minimum threshold in the UK system is satisfied and a pro rata UK state pension for the 5 years' service there will be paid.

The UK's initial position paper proposed only allowing for contributions to other systems that were made before Brexit. 

The European Commission's opening position was to maintain the current arrangements for anyone covered by the Withdrawal Agreement (ie UK citizens living in an EU state or EU citizens living in the UK when Brexit happens). 

In late September a joint technical note indicated that the UK had moved to accept the European Commission's position and that all periods in EU member states will count against the minimum threshold for qualifying for a UK state pension (and vice versa) for people covered by the Withdrawal Agreement. This was confirmed in the report by the negotiating teams on progress in phase 1 of the talks.

There are no guarantees about how state pension entitlement will be treated for people who move between the UK and the EU after Brexit but the indications are that there will be attempts to maintain reciprocation.

The overall progress in moving to phase 2 of the negotiations also means that a "cliff edge" Brexit may be less likely and that any potential problems with UK insurance companies paying pensions to people living in other EU states under passporting arrangements will be dealt with.           

Neil Walsh

Neil Walsh


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