British expats promised state pension uprates until 2023 in no-deal

British expatriates in EU countries will continue to have their state pensions uprated in a no-deal Brexit scenario, the government said over the weekend.

However, the uprating of their pensions has only been promised until March 2023, which could result in benefit losses of nearly £50,000 over a period of 20 years to individuals.

Responding to the Department for Work and Pensions plans, Royal London director of policy Steve Webb criticised the announcement and claimed the “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,” he added.

“Today’s announcement of a time-limited guarantee will be deeply worrying to British ex-pats living in the EU.”

Currently, there are around 500,000 UK citizens living in the EU and benefitting from the state-pension triple lock, which increases the state pension income in line with the highest average earning, inflation or 2.5 per cent annually.

AJ Bell senior analyst Tom Selby also slammed the plans, stating that a no-deal Brexit “creates troubling financial uncertainty for UK expats who have pursued their dream by retiring to EU countries such as Spain or France”.

He said: “At the moment the UK’s membership of the EU means people moving to Europe automatically benefit from state pension uprating in line with the hugely valuable triple-lock.

“Anyone who is currently retired on the continent, or is considering doing so in the coming years, should factor in the possible loss of state pension uprating into their income planning.”

Assuming that the flat-rate state pension is frozen at the 2019/20 level of £8,767 per year and compared to a state pension updated by 2.5 per cent annually, the total income over 20 years would be £175,344, as opposed to £223,955.

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