Brexit: your questions answered

New Eurostar terminal in London

The UK and EU are currently negotiating the terms of their future relationship.

As a business, we keep abreast of political developments, including Brexit, which may have an impact on our business and particularly our customers and advisers.

While there have been no immediate changes, and most changes aren’t likely to be implemented for some time, we understand that you may have questions and we’ve prepared a number of questions and answers which you can see below. These are based on our understanding of current legislation and UK Government plans, which may change.

What’s the timing for Brexit?

The UK was due to leave the EU on 29 March 2019 but Brexit has now been delayed and the UK may leave in a matter of week, month or longer.  Between now and the date of the UK’s departure,  the UK and EU will work to agree a deal covering the terms on which the UK is leaving and the broad terms of their future trading relationship. If this isn’t successful, there will be a ‘no deal’ Brexit and the UK will move straight into its future relationship with the EU. If a deal is approved the UK will leave the EU but there will then be a transition period during which the UK will be treated as if it’s still in the EU for practical purposes. This will last until at least 31 December 2020 but could be extended.

How is Aegon planning for Brexit?

We’re monitoring developments closely and have been focussing on the interests of our customers in ensuring that our business is prepared for all Brexit outcomes, including a no-deal Brexit. This has included looking at the resilience of our supply chains. As a UK business, we’re affected by existing EU laws and regulations relating to financial services. The UK Government and regulators have already said that the UK will continue to follow these existing EU rules until and unless decisions are made at a later date to move away from these. This gives continuity and time to plan for any future changes.

Are there any immediate changes to pension or investment policies?

Pensions and investments tend to be invested in stocks and shares, the value of which can fall as well as rise. Investors may change their views on the value of various stocks and shares as they predict and respond to the impact of Brexit on companies both within and outside the UK.

Looking ahead, the value of pensions and investments will continue to be affected by the value of the funds they’re invested in, and can fall as well as rise and there are no guarantees. The value is also likely to depend on broader economic factors, for example interest rates, currency movements and general views on the UK’s outlook. It isn’t possible to predict these in advance. You could get back less than you invest.

Should I change where I’m invested?

If you’re considering changing where you’re invested, we recommend you speak to your financial adviser. We’re unable to provide advice.

Could there be changes to when I can start to take a pension?

Not as a direct result of Brexit. The minimum age at which you can take a pension is set by the UK Government. It is currently age 55.

Will there be changes to the tax relief I get on pension contributions?

Tax relief is set by the UK Government and there’s been no suggestion that the UK Government will change this as a direct result of our leaving the EU. 

Will there be changes to the rules around ISAs?

Not as a direct result of Brexit. ISAs are a UK product and the rules are set by the UK Government.

Is my Aegon policy safe?

The safety of your policy isn’t directly affected by the decision to leave the EU. Aegon UK is a financially strong company with a robust balance sheet and also benefits from being part of the worldwide Aegon Group.

Will the Aegon Group still support you in the UK?

As an important part of the Aegon Group our parent company continues to support us in the UK. Our recent acquisitions of Cofunds and the defined contribution pensions of BlackRock show our long term commitment to the UK. Aegon UK is independently strong with a robust balance sheet - https://www.aegon.co.uk/about-aegon.html

I’m an Aegon UK customer but live in another EU country - will you continue to service my product?

We have customers who, after taking out a product with us, moved from the UK to the EU. We also have customers who were outside the UK but in the EU when they became customers.   We hope to be able to carry on servicing both groups of customers, but this may depend on the approach taken in each EU country.  If there is a Brexit deal, there will be no change to servicing until the end of the transition period, i.e. until 31 December 2020 at the earliest. If we do find we are unable to continue to service your product, we will set out the options you have to benefit from your policy or investment.

If I’m a UK citizen living and working in another EU country, will I be able to carry on saving in to my pension there?

Individuals entitled to work in the EU will be able to benefit from the pension rules in the country they’re working in.

How will Brexit affect my UK state pension if I stay in the UK, move to the EU in future or am already living there?

UK state pension benefits are set by the UK Government. Generally speaking, if you’ve always lived and worked in the UK, your state pension shouldn’t be directly affected as a result of Brexit.

If you’ve moved or move to the EU, Brexit may impact both how you claim your state pension in future and whether it’s increased automatically each year in line with inflation. If the UK leaves the EU under a deal, the UK government will continue increasing state pensions. In addition, social security ‘coordination’ will continue between the UK and the EU for citizens who have moved before the end of the transition period which means that:

  1. Periods when you’ve lived in a country or contributed towards the state pension there for more than a year can count towards your state pension, even where you’d normally have to live there or contribute for longer than that to qualify for a state pension in that country.
  2. Furthermore, states will work together to pay benefits earned in different counties, which means that you normally only need to make one claim.

If there’s a ‘no deal’ Brexit, the UK Government intends to continue to increase UK state pensions paid to UK pensioners living in the EU but will only do so if the EU does likewise for EU pensioners living in the UK. Similarly, the UK Government hopes to continue with social security ‘coordination’ but will only be able to if the EU agrees. The EU has said that if there is no deal, UK nationals living in the EU will be able to benefit from limited social security co-ordination in that periods of work in the UK of 10 years or more will be counted when calculating their state pension in the EU country.

Unrelated to Brexit, the UK state pension age for both men and women is increasing to 66 between 2018 and 2020 and to 67 between 2026 and 2028.

If I’m a citizen of another EU country living and working in the UK, will I be able to carry on saving in to my pension in the UK?

Yes, EU citizens living in the UK will be able to carry on contributing to personal pensions here.

I’m a citizen of another EU country living in the UK. How is my state pension affected?

If the UK leaves with a deal, social security ‘co-ordination’ will continue to benefit people who have already moved to the UK from the EU or who move there before 31 December 2020. There are two parts to this.

  1. Periods when you’ve lived in a country or contributed towards the state pension there for more than a year can count towards your pension, even where you’d normally have to live there or contribute for longer than that to qualify for a state pension in that country.
  2. The second benefit is that states will work together to pay benefits earned in different counties, which means that you normally only need to make one claim.

In a no-deal Brexit, it’s likely that a more limited form of ‘coordination’ will go ahead.

It’s not known whether EU countries will continue to increase the pensions they pay to their citizens living in the UK.

As part of the Brexit negotiations, what happens to rules around pensions / financial services which have been set at EU level?

Much of the financial services rules and regulations currently applicable in the United Kingdom (UK) comes from European Union (EU) laws. Sometimes these apply automatically as a result of our EU membership. In other areas, the EU sets rules which member countries then need to build into domestic laws and regulations. In either case, at the point we leave the EU any existing EU laws and regulations relating to financial services will continue to apply. This will also be the case for any future EU regulation that comes into effect while the UK is a member of the EU, and during any transition period.  

For the future, the UK Government and financial regulators have said they’ll continue to apply EU rules unless they consciously decide to set different UK rules.

In some cases, when the UK has implemented EU regulations, it’s actually gone further, suggesting it supports these rules, so they may be unlikely to revoke them. It may also be important when agreeing on future trading agreements to demonstrate that the UK financial services industry operates to equivalent standards to those applying in the EU.

As it’s the EU that requires gender neutral annuities and life insurance premiums, will we see this changed?

The European Court of Justice passed the ‘gender ruling’ which requires all services, not just financial services, to be offered on terms which are gender neutral. This is broadly accepted as a very welcome measure. As with all EU legislation and regulation, the starting point will be for the UK to continue to follow existing rules. The UK Government would have the right to remove gender neutral rules for life insurance and annuities in future, but we believe this is unlikely because of the broad support for equalities legislation.

How can I keep informed of developments?

We’ll regularly update our website to help you keep up to date with developments.