Expats warned over post Brexit problems with financial services, insurance and pensions

Expats and those planning to relocate to Europe are being warned over potential difficulties with insurances, pension payments and financial services post-Brexit.

UK Chancellor Philip Hammond is warning of post-Brexit legal uncertainties over existing cross-border pensions, financial services and insurances should no agreement be reached on the so-called passporting rights. Basically, once Britain leaves the EU, UK-based pension and insurance firms may be barred from making cross-border payments to customers unless an agreement is made over contracts. At the present time, financial services companies need EU authorisation in order to sell to clients residing in EU member states, with British firms covered by the EU’s freedom of service laws. If the two negotiating teams are unable to agree a format for continuance of the present set-up as regards business pre-dating the divorce, problems are certain to occur.

According to Treasury Secretary Nicky Morgan, the potential barring of pension and other payments to UK expats still in the EU is a stark example of hard Brexit consequences. Several months ago, the Association of British Insurers raised concerns over the issue, but no reply was given by the government. Hammond has assured Morgan that negotiators are in touch with the UK pensions and insurance industry, with both sides in discussion as to means by which to reduce the impact on the industry and its customers. The nub of the problem, especially for expats with personal pensions, is that there’s no legal certainty as to how their contracts will be affected by Britain’s withdrawal from the EU in March 2019.

For British retirees planning to relocate to EU countries while there’s still time to do so, the situation is at best confusing and at worst a potential disaster which may force them to change their plans. For UK pensioners planning to stay in their chosen European countries by any possible means, it may mean a choice between basic existence on the state pension and a comfortable life as originally planned. Either way, there’s no certainty at the present time.