Ros Altmann: Pensioners could pay the price of Brexit – here’s why

What will be the impact of Brexit on pensions?
What will be the impact of Brexit on pensions?
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ONE little-known side effect of leaving the EU could be to strip British pensioners of their annual state pension increases.

Those who have retired to live in sunnier climes are especially at risk, because so few of their host countries’ pensioners live over here.

Baroness Ros Altmann.

Baroness Ros Altmann.

{Ros Altmann: Brexit was sold under false pretences and is worse than every pensions mis-selling scandal|Read here}

UK Government has only agreed to pay pension increases on a reciprocal basis: This would require other EU countries to commit to paying for British pensioners’ increases, while we pay any increases on their ex-pats’ state pensions here.

However, many non-EU countries refuse this reciprocity and there has been a long-running campaign to get the UK to agree to increase state pensions in other countries, regardless of the actions of their host nation.

This campaign, however, has never succeeded and after a series of court cases, the Government’s refusal was upheld.

It is only legally required to uprate if there are agreed reciprocal arrangements.

This puts the pensions of those who have retired to Europe at risk.

Far more Brits retired in EU than EU pensioners living here: There is little incentive for other European countries to agree to pay the pension increases for retired Brits, because so many more of our people choose to live in countries like Spain and France, while hardly any of their citizens choose to retire over here.

Those living in Spain could be particularly vulnerable: There are 70,000 British people receiving state pensions in Spain, but only 62 Spanish pensioners in the UK.

With such a massive imbalance, the temptation for Spain to make demands that our Government could find unacceptable is obvious.

For Spain, France and Ireland, the imbalance is significant: Evidence cited by the Commons Brexit Select Committee reports that there are 190,000 pensioners living in Spain, France and Ireland, whereas there are just 5,500 pensioners from the entire EEA living in the UK.

Such imbalances clearly put any reciprocal arrangements at risk and 
leave British pensioners exposed to significant losses which were never explained by the Leave campaigns or party manifestos.

Figures from the Office of National Statistics show that in 2017 the Department of Work and Pensions paid state pensions to around 340,000 pensioners living in the EU (excluding Ireland) but only 85,000 EU residents over age 65 were living in the UK.

While not directly comparable as 
some pensioners would be under 65, it is clear that Britain ‘‘exports’’ pensioners to the EU and very few are ‘‘imported’’ here.

British pensioners could lose their uprating this April with No Deal, but are at risk with the PM’s agreement too: The risks to state pensions would arise in just a few week’s time on a no deal Brexit.

The next pension uprating in April 2019 may be withheld from pensioners who retired to EU countries.

Even with the Prime Minister’s Withdrawal Agreement and Political Declaration, the risk of frozen pensions remains, because no future relationship is agreed.

The likelihood of other countries making demands in exchange for reciprocal uprating clearly puts pensioners at risk.

Another example of unexplained, hidden consequences of leaving the EU: The risks to people’s state pensions were never made clear.

Failing to explain risks properly, before they make decisions which could impact their pensions, is against the rules, but somehow when it comes to Brexit, many rules of normal practice are overridden.

Surely it is important that people know what the implications are. But of course it would have been better to explain these in advance to voters.

What will people feel when they find out more of these hidden consequences of Brexit?

We shall see.

Baroness Ros Altmann is a Conservative peer and a former Pensions Minister.