AJ Bell, the online investment platform provider, revealed that the move would affect 472,000 UK citizens retired in the EU who receive ‘triple-locked’ pensions – those that rise yearly in line with inflation.
Tom Selby, a senior analyst at AJ Bell, said: “Brexit would throw the position of expat pensioners, or those who wish to retire to Europe, into doubt.”
Annual increases
Under the current system, Britons retiring to a country within the European Economic Area (EEA) receive annual increases to their pensions to match either wage or price inflation or 2.5% – whichever is the highest.
However, if voters decide to leave the EEA when the EU referendum takes place on 23 June, expats based in Europe could see their pension payments frozen as the UK would need to renegotiate agreements with individual EU countries for retirees to be entitled to increases.
Failure to secure an arrangement would mean an individual aged 65 and in receipt of the £155.65 flat-rate state pension, would lose up to £50,000 in pension increases over 20 years.
“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,” says Selby.
House of Commons debate
The figures come as British politicians prepare to debate the issue in the House of Commons on Wednesday.
The UK government has previously admitted a lack of clarity around how British expats within the EU will be affected in the event of a Brexit vote on 23 June.
In response to a parliamentary question on 23 February, pensions minister Ros Altmann, said: “There is uncertainty about how a vote to leave the EU could impact on access to pensioner benefits for UK pensioners living in other parts of Europe.
“We could only consider the detail of access to pensions and benefits for people in receipt of UK state pensions who are resident in Europe as part of the process for leaving the EU.”
‘Bilateral agreements’
In addition to the EEA, the UK currently has ‘bilateral agreements’ – which grant the yearly increase in state pensions – with only a handful of other countries. These include the US, Barbados, Bermuda, Bosnia-Herzegovina, Jersey, Guernsey, the Isle of Man, Israel, Jamaica, Kosovo, Macedonia, Mauritius, Montenegro, the Philippines, Serbia, Turkey.
Meanwhile, UK pensioners living in Australia, Canada, New Zealand and South Africa, have had their state retirement pension froze so that it is paid at the same rate as it was when they first became entitled, or the date they left the UK if they were already pensioners then.
