House of Commons Library

Brexit and state pensions

Published Tuesday, June 27, 2017

This Commons Library briefing looks at EU law providing for the co-ordination of State Pension entitlement and the possible impact of Brexit

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Entitlement to the UK State Pension is based on an UK individual’s National Insurance record. For the new State Pension introduced on 6 April 2016, an individual needs 35 ‘qualifying years’, of National Insurance contributions or credits (which are available for certain circumstances in which a person is not able to work) to qualify for the full amount (£159.55pw in 2017/18). If they have fewer than 35 qualifying years, they are eligible for a proportionate amount, provided they have at least ten qualifying years (Pensions Act 2014, Part 1).

As part of the EU, the UK is currently part of a system to co-ordinate the social security entitlements for people moving within the EU. The rules also apply to EEA countries and Switzerland. The aim of these provisions is not to harmonise social security systems, but to remove barriers to workers moving between Member States. They enable periods of insurance to be aggregated, so an individual who has worked in other Member States can make one application to the relevant agency in the country of residence - in the UK, the International Pension Centre. This agency then notifies details of the claim to all countries in which the person has been insured. Each Member State in which the person was insured then calculates its pro-rata contribution and puts that amount into payment.  There is detailed guidance on this in volume 2 of DWP’s Decision Makers’ Guide.

The UK State Pension is payable overseas but is only uprated if the pensioner is in an EEA country or one with which the UK has a reciprocal agreement requiring uprating. This is discussed in Library Briefing Paper SN-01457 Frozen Overseas Pensions (May 2016). The details of what is required under reciprocal agreements between the UK and other countries outside the EEA vary. Information is in DWP Decision Makers Guide, Volume 2: international subjects (para 070310 ff).

On 26 June 2017, the UK Government published its offer for EU citizens in the UK, and UK nationals in the EU on their rights and status after the UK leaves the EU. It said:

    • the UK will continue to export and uprate the UK State Pension within the EU;
    • the UK will continue to aggregate periods of relevant insurance, work or residence within the EU accrued before exit to help meet the entitlement conditions for UK contributory benefits and State Pension, even where entitlement to these rights may be exercised after exit.

The potential impact on private pensions is discussed in CBP-07629 Brexit – implications for private pensions (March 2017).

Commons Briefing papers CBP-7894

Author: Djuna Thurley

Topic: Pensions

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