Pensions, Healthcare and Social Security for EU Citizens after Brexit: the forgotten aspect of Free Movement

For EU Citizens from other EU states the immigration talk around Brexit has been about the end of free movement as an immigration route, the acquisition of Settled Status, and the dash for naturalisation as British citizens. Free movement may or may not end with Brexit. But something else, of critical importance to EU Citizens, is also in jeopardy: full participation in the EU-wide system for taking national insurance contributions paid in one or more  EU states (including the UK) and turning it into entitlements to pensions, healthcare, and social security in the country in which the EU Citizen resides.

This system is the nervous system of labour mobility in the European region. It enables self-employed and employed EU Citizens (and lawfully-resident non-EU Citizens) to move from one EU state to another for work.  It ought to be non-controversial. It concerns entitlements that have been paid for from earnings. However, the casual approach of the UK Government towards retaining and entrenching this system in the shadow of Brexit leads to real problems for EU Citizens trying to plan their lives for the years ahead.

In the event of a no-deal Brexit, or the enactment of the UK-EU Withdrawal Agreement, and if and when a future UK-EU future status agreement is concluded, this system risks falling apart or being significantly impaired to the disadvantage of EU Citizens in the UK and British citizens (also EU Citizens) in the rest of the EU. This is true even if an EU Citizen in the UK has obtained Settled Status, as I will show below. No EU Citizen should be complacent simply because they have an immigration permission to remain in the UK.

It is a complicated area of law. In an attempt to avoid legal jargon and show how the system works at present I have set out how it works in bold colours. Each EU state (including the UK) has a healthcare system and a social security system. These systems are paid for out of tax and national insurance payments. How much tax is raised, from whom, and how it is spent are matters for which governments in each country are accountable to their electorates and parliaments. Healthcare and social security systems may provide, among other things, benefits-in-kind (e.g. hospital care), and cash benefits (e.g. an unemployment benefit) or a retirement pension.  Each country makes its own choice as to what sort of benefits-in-kind and cash benefits to fund and to what extent.

Critically self-employed and employed people pay into these schemes; they insure themselves through their contributions to these schemes. Then, when the need arises, they are entitled to hospital care, a cash benefit, or a pension as the case may be. These are not means-tested benefits paid out to people in need out of public compassion, they are benefits to which people are entitled by virtue of having insured themselves against the risks that an ordinary working life throws up (sickness, unemployment, old age, etc.).

With the advent of free movement in the EU, Citizens began to move from one EU state to another in order to work. For such people it was vital that they could remain insured for social security and healthcare when they moved and moved again. To make such a working life possible and secure the systems of healthcare and social security in EU states needed to be co-ordinated so that national insurance contributions (and the like) made in one country, could be added together (e.g. so a person could acquire a pension entitlement), and so that healthcare and social security could be provided in the country in which the person was staying or residing, even though some or all of the national insurance contributions had been paid when living in another EU state. The country in which the healthcare or social security is received need not be the country responsible for meeting the cost.

The principal method of co-ordination is EU Regulation 883/2004. It applies directly in all EU states (including the UK) and enables EU Citizens, their family members (and even by extension some lawfully resident people from non-EU countries), to move around the EU for self-employment and employment without prejudicing their ability to access social security and healthcare. It tells you which country is responsible for paying for a person’s social security and healthcare, which country those benefits can be received in, what benefits may be received, prohibits discrimination, allows some benefits to be exportable, and allows national insurance contributions (and the like) paid in more than one country to be added together.

The Regulation also provides a mechanism for governments to speak to each other, to resolve who is to meet the cost where a person in one country is to receive benefits in another country. EU states may also exchange information about a person claiming a benefit to that person’s advantage. As each country’s social security system is different there is an Administrative Commission to issue decisions on complicated issues as they arise, and a method of dispute resolution where cases are referred to the EU’s Court of Justice. The Regulation is needed to make all this work seamlessly across EU states. It is at serious risk as a result of Brexit.

On one level any split in the system between the UK and rest of the EU, will simply make the UK less attractive for companies and business that operate across the EU. Why locate your staff in London, when the Amsterdam or Frankfurt office can secure their social security, healthcare and pension entitlements when they work around the EU?

But the problem also has a more human scale. Take the example of a self-employed journalist from another EU state. She works as self-employed in her own country, paying her taxes so that she is insured for social security and healthcare in her own country. By doing so she is making contributions to her pension. Then she moves to the UK and continues to work as a self-employed journalist exercising free movement rights. She pays tax and national insurance contributions in the UK and is therefore entitled to social security and healthcare in the UK. In so doing she is also adding to the pension contributions first made in her home country.

Worried about Brexit and her immigration status, she applies for Settled Status/indefinite leave to remain under the UK Home Office scheme. Not satisfied with Settled Status, she aims to naturalise as a British citizen. Will such a person be disadvantaged after Brexit in her social security, healthcare and pension entitlements? In the event of no-deal, certainly and in the event of the Withdrawal Agreement being ratified, to a significant extent. Furthermore, were a future version of her to move to the UK for the first-time after Brexit, then unless steps are taken urgently, any future status agreement (e.g. some sort of loose free-trade agreement) between the UK and the EU is unlikely to give her anything like the same kind of protection.

In a no-deal scenario, the system simply lapses as regards the UK. Even if the UK and each EU state were to take its own measures to replicate the arrangements (to provide for British citizens in the remaining EU and vice versa for EU Citizens), there would be no co-ordination. Thus, there would be no way of adding up national insurance contributions paid in more than one country (e.g. so as to gain a pension entitlement), no way to receive social security or healthcare entitlements in  one country and for the cost to be paid by the other country in which the person is insured, no way for states to share information about an insured person, no Administrative Commission to resolve issues of how to interpret the rules,  and no international court to resolve disputes.  Even a person with Settled Status will be severely prejudiced by such an outcome.

In the event of the Withdrawal Agreement being ratified, only certain parts of the current system are preserved for those who have already moved to the UK from the rest of EU (or vice versa) before the end of the transition period after Brexit. Title III of Part Two of the Withdrawal Act needs to be read very carefully. The UK is only obliged to take ‘due account’ of the decisions and recommendations of the Administrative Commission listed in an annex to the Agreement. In addition, there is only limited provision for healthcare entitlements: for example as regards planned healthcare treatment requested in an EU state other than the state of residence,  and for healthcare for persons staying (visiting) another EU state. There are also restrictions on access to family benefits (e.g. child benefit) and access to sickness benefits in kind. There is also considerable scope for divergence between the UK and the rest of the EU in the future, as regards whether a cash benefit to which a person is entitled in one state can be paid to them in another. I will write about the technical problems with this part of the Withdrawal Agreement in a separate post. The point to note here is that there are real problems with what has been agreed.

For the person who moves  for the first time after the end of the transition period, her situation is bleak. Unless and until a system that replicates all of the good features of Regulation 883/2004 is agreed by the UK and the EU, none of the advantages described above will be available. The new Political Declaration is literally pathetic on the topic ‘The Parties also agree to consider addressing social security coordination in the light of future movement of persons’ and offers no real hope of a comprehensive system.

What is to be done? There needs to be an organised campaign to get this issue sorted out, both for EU Citizens who have already moved to the UK and those who will move in the future. The same need arises for British citizens as regards the rest of the EU. The minimum ‘ask’ must be for full participation by the UK in Regulation 883/2004 (and its equivalent applying to lawfully resident non-EU citizens) or for a system between the UK and the EU that replicated all its advantages.

It is senseless to destroy or impair a scheme designed to aid lawful migration (each person benefitting has permission to live and work in the country) so as make the lives of working people harder. The scheme is based on contributions paid by tax and national insurance.  If the goal of continued full participation in the Regulation is achieved, then even the limitations in the Withdrawal Agreement can be overreached. What is needed is for self-employed and employed EU Citizens affected to start organising and campaigning on this issue now. There is a lot to do where Brexit is concerned. But this stuff matters and should be a priority.


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