In a debate held by the Exiting the European Union Committee on 24 July, Huw Evans, director general of the Association of British Insurers, raised serious concerns about UK pension payments if there is a hard-Brexit.
He said several EU nations currently do not have legal frameworks in place to deal with UK pension payments in a post-Brexit world.
He said the Bank of England has estimated that there are about 38 million pension and life policyholders who will be affected by this issue.
“This is highly material, and there is the related issue that in future, if UK citizens retire to an EU country and they have an insurance-based pension which is paid to them in the domestic bank account of the current country in which they reside, that may also be deemed illegal if there is not an arrangement found for this route,” Evans said.
He said the increasingly likelihood of a “no deal” Brexit has kept the issue in a “legal limbo” that needs to be urgently addressed.
“We did a survey, working with a city law firm, of eight different EU countries and found eight different regimes, so we are not saying this is a blanket risk across all 27.
“But it is a classic issue of the type that requires regulators, with political blessing, to sort the issue out themselves,” Evans said.
Qrops concerns
Chris Lean, a chartered financial planner with European adviser network OpesFidelio, said it is well-known that qualifying recognised overseas pension schemes (Qrops) can pay into non-UK accounts.
“However, there has to be a solution to this before March as there will be many expats worried about how to get their monthly pension payments.
“In the meantime, I hope that this does not lead to this issue becoming a sales aid for knee-jerk and inappropriate Qrops sales,” Lean said.
