MP Nicky Morgan has written to the Chancellor to ascertain how cross border pension payments are likely to be treated post-Brexit.
Without a proper agreement, pensions companies could find themselves unable to pay private pension payments to British savers living in the European Union. This is because current ‘passporting rights’ that enable pensions companies to service existing contracts would no longer apply.
In the letter, the Ms Morgan, who is chair of the Treasury Select Committee (TSC), seeks the view of the Treasury as well as possible solutions, following discussions with the Association of British Insurers (ABI).
The ABI has raised concerns that unless negotiations over how to handle long-standing contracts are part of the first phase of Brexit negotiations, there may not be time to resolve them effectively.
In her letter to The Treasury, the Rt Hon, Ms Morgan wrote: “Without further action, insurers will lose the legal authorisation to service these contracts: they must break the contract or break the law.”
She added: “As I am sure you will be aware, the implication of being unable to honour cross-border contracts are potentially serious. In particular, citizens – including many UK expatriates – living in the rest of the EEA in receipt of personal pensions may face difficulties getting paid.”
Citizens of the EU living in the UK are likely to find themselves in the same situation.
Director general of the ABI, Huw Evans, says: “We are pleased that Nicky Morgan, as Chair of the TSC, has raised this important issue with the Chancellor. This is a shared challenge for the EU and UK and a vital issue for millions of our customers. We have been urging all sides to address it as a matter of urgency and agree on a reciprocal solution.”
Commenting on the issue, Tom McPhail, head of policy at Hargreaves Lansdown adds: “Given the extent to which European regulation and legislation already sets the agenda for domestic UK regulation of financial services, it shouldn't be too challenging to reach an accommodation whereby business can continue as usual. Nevertheless, the ABI is right to highlight the risks of not making sure a solution is identified and implemented in a timely manner.”