Current pension and healthcare rights may survive Brexit


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The UK has begun Brexit negotiations by pledging to protect existing pension and healthcare rights for British expatriates living in Europe.

It may be early days in the Brexit negotiations, but so far there is some reassurance for expatriates living in Spain, Portugal, France, Cyprus, Malta and other EU member states. 

On 26th June, Theresa May’s government published their “fair and serious offer” on EU citizens’ rights after Brexit. While this focuses on residency and benefits for EU nationals in the UK, it also pledges to protect existing pension and healthcare provision to Britons living in Europe. 

Subject to mutual agreements being in place, the Prime Minister committed to “continue to export and uprate the UK State Pension and provide associated healthcare cover within the EU”. 

What this means for pensions

Currently, Britons living in most countries outside the European Economic Area (EEA), such as Canada and Australia, have the value of their State Pension payments frozen when they leave the UK permanently. Meanwhile, retired expatriates within the EU/EEA are eligible for annual increases in line with the government’s ‘triple lock’ commitment – whichever is highest: the rate of inflation, earnings or 2.5%.

Theresa May’s offer to “export and uprate” the State Pension means British pensioners living in the EU post-Brexit can expect to continue receiving increases in their State Pension payments each year. Increases are set to stay linked to the triple lock until at least 2022.

While this is clearly encouraging, most expatriates do not rely solely on their State Pension to fund their retirement. It is important to consider how your other pensions, savings and investment income can provide for your future, and how they may be affected by Britain leaving the EU. See more about pension options for expatriates

What this means for healthcare 

The UK’s offer on citizens’ rights also provides some comfort that existing entitlements to free healthcare may continue for Britons living in EU countries after Brexit. The proposal states the government will “seek to protect” current healthcare arrangements. For expatriates, this means healthcare costs would continue to be reimbursed by the UK through the S1 system (or similar), and that holders of the European Health Insurance Card (EHIC) would remain eligible for free or reduced healthcare when visiting another EU country. 

However, this is subject to the EU27 making similar guarantees for their nationals living in the UK. You may prefer to secure peace of mind, whatever happens, by lining up private health insurance for your family.

The path to securing agreement

Of course, this is just the opening gambit of Brexit negotiations and there are no guarantees that what the Prime Minister is proposing will be accepted by the other EU member states. She has made it clear that her offer only stands if she can secure a reciprocal deal with the EU27 that they will provide similar concessions to their citizens living in the UK. 

Crucially, both sides agree that securing reciprocal rights for citizens is an absolute priority. 

Earlier in June, the EU27 pledged a lifetime guarantee of UK citizens’ current rights in the EU – so long as Britain could match the terms. Some feel that the UK government’s formal offer falls short of this. One sticking point on securing agreement is likely to be who has the authority to guarantee the rights of EU citizens in Britain. Theresa May has rejected the EU27 demand for the European Court of Justice (ECJ) to have jurisdiction, insisting British law should apply.

How best to prepare

Despite agreeing that citizens’ rights are top of the agenda, therefore, it could take some time to iron out the full post-Brexit terms. Meanwhile, until Britain leaves the EU – on track for 29th March 2019 – there will be no change in your current rights and freedom of movement.

However, the final terms of any new reciprocal agreements could prove less favourable for expatriates than today. With under two years of certainty left, now is the time to review your residency, estate planninginvestments, pensions and general tax planning options.

As well as securing your position, this can enable you to identify and take advantage of current opportunities that may have a limited shelf-life, such as transferring your private UK pension funds without paying UK tax. Given these unchartered waters, it is also sensible to look into the best currency mix for your investment and make sure you have a diversified portfolio – not overly exposed to UK assets – that can weather any Brexit turbulence. 

Speak to a regulated professional adviser about how best to structure your finances and help prepare for the uncertainty ahead. Armed with the right strategy, you can make the most of your chosen lifestyle in your country of choice and adapt accordingly as Brexit negotiations take shape.

Any questions? Ask our financial advisers for help

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Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.