The UK government is writing to more than 363,000 British expats who retired and now live in the EU to reassure them that their state pensions will still increase in the event of a no-deal Brexit. However, that guarantee is only valid for three years.

The Department for Work and Pensions (DWP) is sending out letters outlining that even in the event of a no deal Brexit, pensions for those in the EU will be uprated for a further 3 years – an increase of at least 2.5% annually, worth up to £200 a year per person.

Pensioners will not need to do anything to continue receiving their state pension in that time. But the uprating is only guaranteed this for the next three years in a no-deal Brexit scenario.This will be cold comfort for many and simply serve to extend the period of uncertainty”

Quilter head of retirement policy Jon Greer says the move “will be cold comfort for many and simply serve to extend the period of uncertainty”. 

“The government has now written to pensioners living in the EU to confirm that the uprating guarantee will continue to apply to their state pension for another three years. This will be cold comfort for many and simply serve to extend the period of uncertainty. It remains to be seen whether the government will be able to negotiate a new arrangement to ensure this policy continues. At worst, it could result in state pensions being used as a bargaining tool in wider negotiations. 

“With many people living into their nineties and beyond, a three year guarantee will be woefully inadequate and only serve to increase their anxiety. It is commendable that the government has set up a dedicated call centre as they need to ensure expats are well informed about this decision, what it means for their monthly income and present the alternatives well in advance of the three years expiring. This will allow expats to appropriately adapt their financial plans and give them enough time to prepare for new rules around their income growing.”

During the three-year period, the UK government plans to negotiate a new arrangement with the EU to ensure that uprating continues, the DWP stated.

Thérèse Coffey, secretary of state for Work and Pensions, stressed that pensioners in Europe “who have paid into the system for years deserve peace of mind over their future finances”.

She added: “Not only are we providing much-needed reassurance for hundreds of thousands of retirees, we’re ensuring we are fully prepared for leaving the EU on October 31.

“No matter the circumstances of Brexit, we’ve made sure that pensioners do not need to take any action to continue receiving their hard-earned state pension.”

The DWP has established a dedicated call centre to answer any questions from those affected.

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