Pensions - Articles - No deal Brexit ending UK state pension upratings

Steven Cameron, Pensions Director at Aegon comments on the Government announcement that state pension inflation upratings to UK claimants now resident in the EU are only guaranteed to continue for 3 years after a no deal Brexit.

 Steven Cameron, Pensions Director at Aegon, comments:“The UK Government’s announcement that EU residents entitled to UK state pensions are only guaranteed to receive inflation upratings for 3 years in the event of a no deal Brexit calls into question what could happen thereafter. While designed to offer reassurance that valuable upratings will continue for this 3 year period, it raises the spectre that such increases might cease in 2023.

 “Under current rules, UK state pensioners resident in the UK and the EU benefit from the ‘triple lock’, which means state pensions increase at the highest of 2.5%, average wage growth or prices growth. This has meant over recent years, pensioners have seen their state pension increase faster than price inflation, improving their purchasing power. While the current Government has not committed to continuing the triple lock rather than for example price inflation increases beyond the current Parliamentary term, the potential for the half million who have retired to live in the EU losing all inflation protection will be a big concern. If inflation were to be at the Bank of England’s target level of 2.5%, £1000 today would be worth only £781 in 10 years’ time, a 22% drop in purchasing power.”

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