The Government’s announcement today that annual state pension increases will only be guaranteed for the next three years to British pensioners living in Europe is ‘deeply worrying’, according to Steve Webb, Director of Policy at Royal London.
Under current rules, British pensioners in certain countries such as Australia, Canada and South Africa have their state pension frozen each year, but British pensioners in the EU get annual increases in line with pensioners living in the UK. It had been widely assumed that this policy would continue indefinitely post-Brexit. But today the DWP has announced that annual increases will only be guaranteed for the next three years, after which the Government ‘plans to negotiate a new agreement’. In the absence of such an agreement there is no guarantee of annual increases. With pensioners being retired for potentially 20-30 years, the lack of annual inflation protection could make a very large difference to their standard of living.
Commenting, Steve Webb said:
‘This attempt to reassure British pensioners living in the EU will actually have the opposite effect. They have received repeated assurances that their pensions would be increased each year regardless of the outcome of the Brexit process. Today’s announcement of a time-limited guarantee will be deeply worrying to British ex-pats living in the EU. If the UK leaves the EU on bad terms with the rest of the Europe there is no guarantee that a new uprating arrangement will be reached, and today’s statement offers no assurance to pensioners that annual increases will continue after that point’.
Notes to Editors
Text of Govt. announcement can be found here: https://www.gov.uk/government/news/uprating-guarantee-for-uk-state-pension-recipients-living-in-eu
About Royal London:
Royal London is the largest mutual life insurance, pensions and investment company in the UK, with assets under management of £139 billion, 8.6 million policies in force and 4,348 employees. Figures quoted are as at 30 June 2020.