The UK Government on the 1st of September 2019 announced that the UK state pension paid to Brits retired in the EU will continue to benefit from triple-lock until 2023.
This means that until 2023 the state pension paid to EU expats will increase by the higher of either 2.5 per cent, average wage growth or the CPI rate of inflation every year. The current new state pension for those who retired after 6 April 2016 is £168.60 per week, or £8,767.20 a year. It means that those living in the EU will see their pensions increase by almost £220 a year until 2023.
The main issue is that this uplift is not given to all expats; it is given to expats in certain countries, but not others, including Australia and Canada. The UK is almost unique in the EU in distinguishing between pensioners who are living in the country and those that are not.
The move has now opened the threat of removing automatic increases that expat pensioners receive as a result of Britain’s EU membership. The cost of the uplift to EU expats is estimated by DWP to cost around £500 million per year, which is a worrying statistic.
The three year extension, regardless of a Brexit deal or not, gives a temporary boost but no long term certainty.
The effect on your income by the freezing of the state pension can be reduced through a tailored savings strategy. Should you like a confidential financial review to maximise your options please contact Antony Poole.