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Statement on the UK’s exit from the EU (Brexit)

A statement from The Pensions Regulator (TPR) on the UK’s exit from the European Union (Brexit), aimed primarily at the trustees of defined benefit (DB) pension schemes.

Published: 24 January 2019

Because workplace pensions are largely domestic in nature, we do not expect the UK’s departure from the European Union (EU) to have a significant effect in respect of the legislative basis under which schemes operate or trustees’ ability to continue to administer their scheme effectively. This is the case in respect of the immediate effects which may arise from the UK’s departure from the EU, on either a negotiated settlement or ‘no deal’[1] scenario. However, there are some specific areas that trustees should pay attention to.

We remind trustees and sponsors of the Brexit-related steps we expected them to initiate, as we outlined in our 2016 statement after the referendum result was announced and in our 2018 Annual Funding Statement (PDF, 86KB, 16 pages). Where relevant, trustees should undertake a review of any actions or contingency plans in the context of ‘no deal’, if they have not already done so. The 2019 Annual Funding Statement (due to be published in early March 2019) will provide an update on our expectations around managing risks from the perspective of DB pension plans which will be relevant to Brexit and the wider economic environment.

The Department for Work and Pensions (DWP) has published guidance in respect of the payment of occupational pension benefits to EU citizens in the UK and UK nationals in the EU in a ‘no deal’ scenario. Trustees should familiarise themselves with DWP’s guidance where necessary, and speak to their administrator and be prepared to communicate to their members. It remains important that continuity is maintained in respect of the payment of benefits.

Schemes currently authorised and approved to accept cross border contributions, and those who are considering applying for authorisation and approval, will need to consider the implications of the UK’s withdrawal from the EU and how either a negotiated settlement or ‘no deal’ might affect them and their members.

Leaving the EU with a deal remains the Government’s top priority. In the event that a deal is not reached the government needs to ensure we are prepared. TPR is working closely with the UK Government, the institutions of the EU and, where relevant, pensions’ authorities of Member States to ensure that the position of authorised and approved cross border schemes and their members is considered. This is the case in respect of the range of possible exit scenarios.

Trustees of schemes that are currently authorised and approved should also be considering contingency plans in a ‘no deal’ scenario, together with participating employers and their scheme advisers. Trustees who may be considering applying for authorisation to commence cross border activity should, where possible, wait until there is more certainty regarding the UK’s exit from the EU before commencing any application.

Important

This statement is guidance only and does not constitute legal advice. You should consider whether you need separate professional advice before making specific preparations.

[1] A no deal scenario is one where the UK leaves the EU and becomes a third country at 11pm GMT on 29 March 2019 without a Withdrawal Agreement and framework for a future relationship in place between the UK and the EU.