EU referendum, welfare cuts, and pensions

The new UK government is committed to making ‘savings’ or cuts of £12 billion in the welfare budget. This is said to exclude payments to pensioners.

But perhaps one option will be to only protect pensioners living in Britain.

Pensioners who move abroad to Australia, Canada, New Zealand and elsewhere have their UK state pension frozen – the green line below. But pensioners who move to any other EU country get the same annual increases as if they stayed in the UK – the blue line below. Currently the annual increase is a guaranteed minimum of 2.5 per cent.

Pensions Graph - EU & Commonwealth

There is speculation that the EU referendum will focus on non-treaty agreements such as the mutual recognition of welfare benefits. So-called “British welfare for British people”. We can expect a steady flow of tabloid newspaper articles with headlines like, “Large criminal family from EU gets £400 a week plus new house by social workers”.

So, removing mutual recognition of welfare systems could be the result of the EU referendum, which then opens the door to freezing the state pension for people living anywhere outside the UK, including popular warmer EU destinations such as France and Spain.

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