Future retirees are facing uncertainty over the level of state pension they will receive if they move abroad and could miss out on around £140,000 of income once the Brexit transitional period ends, Aegon claims.
The pension company is warning that the outcome of Brexit negotiations could have a huge impact on the retirement prospects of UK citizens who plan to move to and retire in the European Union (EU) or Switzerland.
Currently, those who are already living in the EU before 31 December 2020 have been reassured that they will receive the same increases to UK state pensions as paid to those living in the UK.
This is based on the triple lock, which guarantees the state pension will rise by the highest of earnings growth, price inflation or 2.5% each year.
However, aside from those who move to Ireland, there has been no guarantee from the UK on the level of the state pension for those retiring and living in other countries.
Steven Cameron, pensions director at Aegon, says: “The outcome of last-minute Brexit negotiations could have a huge impact on those who may be planning to retire abroad to another EU country.
“With many people living 20 or more years after state pension age, any form of inflation proofing is highly valuable, with the triple lock particularly so.
“An inflation linked state pension of £175.20 a week is worth £336,500 whereas one that doesn’t increase is worth £191,000 which is £145,500 less.”
Cameron adds that while the treatment of state pensions may not be top of the agenda for last minute Brexit negotiations, he warns decisions in these areas could make a huge difference to those planning to move abroad in future for their retirement years.
David Sinclair, director of thinktank the International Longevity Centre, says: “For some older people, the state pension provides a significant part of their retirement income.
“These people in particular will want to be confident that they can afford their retirement aspirations irrespective of whether they stay in the UK or move abroad.
“Older people who want to move abroad need to be confident that value of their savings alongside their pension will be adequate.
Sinclair adds that retirees will need to make their wealth last 20-plus years and says this uncertainty is unhelpful for those who want to plan for the long term.
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