MPs have again been warned that it may become illegal to pay private pensions to expat Britons if the government fails to secure a Brexit deal.
A no-deal Brexit would lead to UK firms losing access to the EU’s ‘passporting’ regime – meaning UK-based insurers and providers could be barred from making payments into the EU post-Brexit if no alternative arrangement is made.
This was the warning from the Association of British Insurers (ABI) when giving evidence to the Exiting the EU Committee’s inquiry into process made in the negotiations.
Speaking to the committee yesterday (24 July), ABI director general Huw Evans said such a risk was “perfectly plausible” in the event that no deal is reached by 29 March next year.
“If UK citizens retire to an EU country and they have an insurance-based pension paid to them in the country in which they reside, that amount will be deemed illegal if there isn’t a route [alternative to passporting] found,” he said.
It echoes worries expressed by the Treasury Committee, whose chairwoman Nicky Morgan last year wrote to chancellor Philip Hammond noting that a “cliff edge” Brexit could lead to affected businesses having to choose whether to “break the contract or break the law” on contracts which straddle Brexit day.
The issue would particularly affect those with policies provided by insurers from occupational scheme buyouts, as well as members of cross-border schemes in Northern Ireland and the Republic of Ireland.
The possibility is even likely under the government’s current agreed Brexit position. In its white paper issued a couple of weeks ago, the government repeatedly stressed that it would be impossible to remain in the EU’s passporting regime post-Brexit as this requires membership of the Single Market. Further, any future arrangement “cannot replicate the EU’s passporting regime”.
The Financial Conduct Authority (FCA) also yesterday confirmed it would put in place a “temporary permissions regime” to allow EU-based companies to continue to access the UK market. Depending on the outcome of a consultation, due to be launched in autumn, and the negotiations, this would apply to the end of the transitional period, December 2020.