EU regulator issues guidance on expat pensions
The European insurance watchdog has said contracts concluded before March 30 will still be valid even in the case of a no-deal Brexit, giving British expats guarantees that they will be able to continue to receive their pensions.
In July, the Association of British Insurers warned a no-deal situation would "leave insurance contracts in a legal limbo", where insurers would be unclear if they could legally pay claims for contracts that have been written pre-Brexit.
Weeks later, the government confirmed British expats may lose the ability to access contracts such as life insurance and annuities should there not be a deal between the UK and the bloc.
Now the European Insurance and Occupational Pensions Authority (EIOPA) has issued recommendations for the sector, which determine that even if the UK withdraws from the European Union without a deal insurance contracts concluded before the end of March will be valid after that date.
However, the providers will not be authorised to make any changes to these cross-border insurance contracts, it added.
The European regulator stated many UK providers, in particular those with large cross-border business in the EU27, had already taken action and were implementing contingency measures.
But there was an outstanding amount of insurance business for which there were no alternative measures in place - about 0.16 per cent of the total insurance business as of November 2018, EIOPA warned.
Huw Evans, director general at the ABI, said: "This is sensible guidance which helps reduce legal uncertainty over paying some insurance contracts post-Brexit.
"It is particularly important that UK citizens who bought pensions in the UK but now live in the EU have the extra reassurance this provides.
"Allowing contracts signed before Brexit to run off and extra time for insurers to transfer portfolios into the EU27 are also pragmatic decisions which we welcome.
"However, while this guidance reduces uncertainty, it does not eradicate it as all EU27 individual regulators must implement it in the same way.
"A no-deal Brexit remains a major challenge for the UK and the EU insurance industry’s customers and must be avoided at all costs."
If approved, the withdrawal agreement between the UK and the EU will allow British citizens in the EU 27 to retain their legal residency and social security rights, but only until December 2020.
Meanwhile, former pensions minister Baroness Ros Altmann has warned of the risks to British expats in a no-deal Brexit, as state pensions will only be uprated if host countries reciprocate.