British citizens who retire in the European Union could find it “illegal” to be paid their private pension in the case of a no-deal Brexit, MPs have heard.
Giving evidence to the Exiting the European Union Committee today, 24 July, Association of British Insurers (ABI) director general Huw Evans said that it was “perfectly plausible” that pensioners would not be paid in a no-deal scenario.
In the event of a no-deal, pensioners looking to be paid into a bank account of the country they are living in could be left in a “legal limbo”, if the firm paying out is not authorised to transact business in that country under a new financial framework.
Evans said: “There is the related issues that in future, if UK citizens retire to an EU country and they have an insurance based pension paid to them in the country which they reside, that amount will be deemed illegal if there isn’t a route found.”
Committee Chair Hillary Benn replied: “British pensioners … might find that they wouldn’t get paid their pension, is that what you’re saying?”
Evans said: “That is a perfectly plausible risk in the future if no agreement is reached.”
Despite this, Evans did note that each country had different arrangements, meaning and that it would not be a “blanket risk across the 27”.
“It is a classic issue of the type, which requires regulators, with political blessing, to sort the issue”, he added.
According to the ABI, the Bank of England and the European Insurance and Occupational Pensions Authority (EIOPA) estimate there are 38 million EU insurance policy holders that could potentially be left in the “legal limbo”.
Earlier this week, Aegon said that the government delays in implementing the cold-calling ban and the pensions dashboard are consequences of the Brexit process.
Aegon pensions director, Steven Cameron, said: “The Brexit process was never going to be a simple affair and from outset, the government made clear legislation to implement Brexit would push other policy initiatives down the priority list.
“The challenges of social care funding, saving for retirement and avoiding scammers are real issues today and will be with us long after the dust settles on Brexit. With no end in sight on Brexit deliberations, it’s worrying that so much of the government’s ‘business as usual’ agenda for savers is being put on hold.”
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