House of Commons Library

Brexit - implications for private pensions

Published Tuesday, September 10, 2019

An overview of implications of Brexit for workplace and personal pensions

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EU legislation has an impact on pension schemes directly, through legislation such as Directives which are transposed into UK law and indirectly, because the costs of complying with investment markets legislation are passed to pension fund clients by asset managers, brokers and banks.

In a statement on the UK’s exit from the EU, in January 2019, the Pensions Regulator said that because workplace pensions were largely domestic in nature, it did not "expect the UK’s departure from the European Union (EU) to have a significant effect in respect of the legislative basis under which schemes operate or trustees’ ability to continue to administer their scheme effectively." However, there were some specific areas it advised trustees to pay specific attention to, such as the impact of Brexit on investments and the employer covenant (i.e. the employer’s strength and willingness to support the pension scheme).

For contract-based schemes, the Financial Conduct Authority (FCA) explains that:

If the UK leaves the EU with a deal, there will be an implementation period which would mean that EU law will apply until December 2020 and protections and rights associated with your financial products and services won’t change during that period.

The FCA has taken steps to limit the impact of a ‘no deal’ scenario on financial products and services provided to UK-based customers:

In particular, the Government has put in place a temporary permissions regime to allow EEA providers to operate in the UK for a period after the UK has left the EU while they get permanent FCA authorisation. They have also made legislation for a financial services contract regime enabling firms that do not enter the temporary permissions regime to wind down their UK business in an orderly fashion.(FCA/consumers/how Brexit affect you, July 2019)

For those living in an EEA country, it will depend what measures have been put in place:

Some European authorities are taking steps to allow UK firms to continue to service EEA-based consumers after exit, although there is no single approach across the EU and the position depends on the steps that each country decides to take.  There are also steps that firms can take themselves to ensure they can continue to do business with you, such as transferring business to an EEA part of their group of companies (ibid).

UK Government guidance on pensions and benefits for UK nationals in the EEA or Switzerland in the event of a ‘no deal’ Brexit states that:

Annuities and personal pensions from a UK pension provider

Your pension provider should have made plans to make sure you can still get payments from your annuity or personal pension after Brexit.

Your pension provider should contact you if they need to make changes to your annuity or pension or the way you are paid after Brexit.

If you have any questions, contact your pension provider.

UK workplace pensions

UK law allows for workplace pensions to be paid overseas. The government does not expect this to change after Brexit.

If you have any questions, contact your pension provider.

If your workplace pension is paid into a UK bank account, your bank should contact you if they need to change the way you receive your pension after Brexit.

See also, benefits and pensions for EU, EEA and Swiss citizens in the UK if there’s a no-deal Brexit.

Individuals concerned about the impact of a no-deal Brexit can contact the Pensions Advisory Service, which has also produced a series of frequently asked questions both for residents of the UK and EU.

Other issues are covered on the Brexit: research and analysis section of the Parliament website, including CBP-7894 Brexit and State Pensions (September 2019) and CBP-7628 Brexit and financial services (August 2019).

 

 

Commons Briefing papers CBP-7629

Author: Djuna Thurley

Topic: Pensions

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