Payments to pensions and life policies that could affect up to 38 million policyholders across the European Union have been deemed “illegal” in a post Brexit environment under current rules.
In a debate earlier shown earlier today on Parliament TV, entitled ‘The progress of the UK’s negotiations on EU withdrawal ‘, Huw Evans, Director General, Association of British Insurers, said that payments to policyholders residing in European Union countries would not be able to be made as they would be deemed “illegal” within that country unless rules were changed.
Despite moving to calm fears of millions of expats, Evans admitted that unless politicians and regulators come to an agreement to stop the situation coming to fruition. Evans also confirmed that at the moment there is an impasse with the European Commission and the European pensions regulator EIOPA refusing to budge over the matter, despite the chaos that could ensue if it is not resolved.
The debate chaired by Labour MP Hilary Benn, featured contributions by Catherine McGuinness, Policy and Resources Committee Chairman, City of London Corporation, Adam Minns, Executive Director, Commercial Broadcasters Association, and Huw Evans, Director General, Association of British Insurers, also highlighted a future issue relating to the payments of pensions that would also be deemed illegal under the current rules.
‘No legal framework’
Evans, pictured above left, said that under an increasingly likely ‘no deal’ Brexit situation the industry is in limbo because EU countries would not have the legal framework to make the payments.
In a response that clearly shocked debate chair Hilary Benn, Evans highlighted that the issue was “no small issue”. He said that it currently affected more than “38 million policyholders, according to Bank of England and EIOPA estimates”, to which Benn asked to clarify saying “38 million?”, to which Evans reconfirmed.
And, he added, that in the future the matter could be worse as pension payments would also be “illegal” unless rule changes were implemented.
“A ‘no deal’ keeps that situation in the legal limbo that it is at the moment,” said Evans. “This is no small issue.”
Evans pointed that two years down the line [post Brexit], if a policyholder made a claim, then the legal framework of any EU state would mea that receiving that payment would be ‘illegal’. Also, any insurance-based pensions would not be able to be paid to UK citizens that live outside the UK.
“In the future [unless rules are changed] if UK citizens retire to an EU country and they have an insurance-based pension with is paid to the international bank account of the country in which they reside that also may be deemed ‘illegal’ if there is not an arrangement in place. There is an existing problem and a future problem.
Evans also added that all EU travellers and, indeed, all UK expats living in the EU, would also need prepare for the loss of the European health card and make alternative arrangement for health and medical insurance under a ‘no deal’ situation.