Britons retiring to Europe could see their state pensions curtailed by £50,000 if the UK votes to leave the EU next month, according to a UK investment firm.
AJ Bell, senior analyst Tom Selby, said that the ‘triple-lock’, which uprates pensions for anyone who retires to a country within the European Economic Area (EEA), may lose this as the UK cannot negotiate similar arrangements with EU countries in the event of a Brexit.
The triple-lock means pensions rise by the highest of either earnings, prices or 2.5% each year.
Where no reciprocal arrangement is agreed, people retiring to those countries could see their state pension payments frozen, says Selby.
Based on an individual aged 65 in receipt of the £155.65 flat-rate state pension, the loss of uprating would cost around £50,000 over 20 years.
There are currently 472,000 UK citizens retired in the EU who receive uprated pensions who could also be affected by a Brexit vote, Selby said, quoting parliamentary figures.
“Brexit would throw the position of expat pensioners, or those who wish to retire to Europe, into doubt,” said Selby.
“While some believe the Government will be able to negotiate protections for expat pensioners in the event of a Brexit, it is worth noting the UK has not arranged a similar deal with a non-EU country since 1981, primarily due to the costs involved.”
A debate on the uprating of overseas pensions is due to be held in the House of Commons today.
*A special Brexit conference hosted by Funds Europe recently will feature in the May issue of the magazine, out shortly.
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