The Association of British Insurers (ABI) have warned that retired British expats could see their pensions deemed illegal under a no-deal Brexit. During a hearing of the Exiting the European Union committee ABI’s director general, Huw Evans, said a no-deal situation would leave insurance contracts in a legal limbo, where insurers would be unclear if they could legally pay claims for contracts that have been written pre-Brexit which would have to be paid out in countries in the European Union.
He noted that this applied to expat pensions 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. In many countries in the EU, if you’re not authorised to transact business there, then it is illegal to pay a claim to fulfil a contract.
Mr Evans said the problem could be resolved, but it required regulatory cooperation and political agreement to do so and that each EU country has different arrangement around this.
It could potentially be an issue from 2021 since the government announced that European rules will continue to apply to the UK until the end of 2020. According to figures from the Office for National Statistics (ONS), there are 900,000 Brits currently living in the EU, and of these, 220,000 are aged 65 and over.
