No Deal or Hard Brexit: Social Security, Healthcare and Pensions after Brexit

Introduction

After the General Election on 12 December 2019, the Withdrawal Agreement may never be ratified. A new UK Government with a working majority in Parliament could take a different course: there could be no deal or there could be a revised bare deal. Such a bare deal, or hard (-er) Brexit, may see further revisions to the Withdrawal Agreement.

Alternatively, a new UK Government with a working majority in Parliament may leave the Withdrawal Agreement intact but fail or refuse to secure future status agreement to cover the period after the end of the transition period (31 December 2020). In the latter scenario there would be a no-deal Brexit at that point. What would happen to those who currently benefit from the co-ordination of social security, healthcare and pension entitlements in Regulation 883/2004?

The way in which the co-ordination system works has been set out in my earlier blog post ‘Pensions, Healthcare and Social Security for EU Citizens after Brexit: the forgotten aspect of Free Movement’. This post builds on that one. The co-ordination 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. In the event of a no-deal Brexit this system risks falling apart.

In considering what happens in the event of no-deal Social Security, Healthcare and Pensions need to be considered separately and together, both as regards EU Citizens in the UK and UK nationals in the EU before Brexit, at the end of the transition period (31 December 2020), and arriving for the first time at the end of the transition period.

No deal

In a no deal scenario, Regulation 883/2004 would cease to apply when the UK leaves the EU. EU Citizens in the UK and UK nationals in the EU would automatically fall out of the reciprocal co-ordination system for Social Security, Healthcare, and Pensions. Both the UK and individual EU states have implemented some emergency measures but these are very limited in scope and ambition.

For example, no provision has been made for what is to happen as regards periods of residence, work, and payments of national insurance contributions (and their equivalent) done after the UK leaves the EU. How are they to be added up (aggregated) where a person has worked in more than state including the UK? How would they be considered for the purposes of considering whether a person has a pension entitlement in one state based in part on contributions made in another state?

Take the example of a self-employed journalist from another EU state. She works in the UK for less than ten years and needs to draw on pension contributions paid in her home state to secure a UK pension entitlement. What happened in the event of no deal? Will the UK take her home state pension contributions into account? Her problems may extend further. What happens if her entitlement to her home pension that she has acquired may be paid at the full rate if she resides outside her home state but only where she resides in another EU state? The UK will not be an EU state. The UK cannot compel her home state to up-rate her home state pension.

The problems will be particularly acute for a person who moves for the first time after the UK leaves the EU but as indicated above they also extend to persons who have moved between the UK and the rest of the EU before the UK leaves the EU. Absent the co-ordination regulation problems both foreseen and unforeseen, will multiply.

Moreover, in a no-deal scenario, there will not be, as now, an Administrative Commission to oversee, as now, the working of the co-ordination of social security, pensions and healthcare. Nor will there be, as now access to an international court (like the Court of Justice of the European Union) to resolve ordinary disputes on cross border issues. There will also be no information sharing between the UK and other EU states and so the burden of proving entitlements will falls on individual persons affected.

The EU response

The EU legislature has made a contingency plan by way of adopting Regulation 2019/500. Its focus is on social security and pensions. It ensures that periods you have worked before Brexit as an EU Citizen in the UK or as a UK national in the EU will be recognised.

But it does not cover benefits in kind, for example those that allow UK nationals in Spain who have retired there to have access to free healthcare there. What is to happen to healthcare? There is no EU-wide measure to compel EU states to fund the healthcare of an EU Citizen in the UK in the event of no deal. EU states would have to decide on an individual basis for their respective nationals whether to fund any healthcare costs that the UK was not prepared to meet.

Moreover, Regulation 2019/500 provides no protection as regards social security, pensions, and healthcare as regards persons who moves for the first time after Brexit.

In addition, the European Commission has a Contingency Action Plan (COM/2018/890) that encourages (but does not compel) EU states to continue to provide certain social security rights to EU Citizens and UK nationals prior to Brexit. However, it is critical to note that if the UK drops of out of the EU in a no-deal scenario, the Commission cannot compel action nor can the EU legislature make laws beyond its competence.

As regards pensions, the Commission has sought to encourage EU states to continue to allow their nationals to export pensions to the UK but it cannot compel them to do so. EU Citizens in the UK will be reliant on their home states to allow export of home state pensions to their nationals in the UK and to do so at the full rate.

The UK response

The UK has out some legislation in place to provide the framework within which action might be taken. But it has only legislated to a limited extent by way of statutory instruments for actual provision. Section 8 of the European Union (Withdrawal) Act 2018 gives Ministers the power to make regulations to prevent, remedy, or mitigate ant deficiency in retained EU law (retained that is in UK law after Brexit). But thereafter everything depends on what provision will be made. As the Explanatory Memorandum to the Social Security Coordination (Regulation (EC) No 883/2004, EEA Agreement and Swiss Agreement) (Amendment) (EU Exit) Regulations 2019 (drafted to try and mitigate a few of the consequences of no deal) states:

‘The whole system of social security coordination relies on cooperation and reciprocity from other Member States (‘MS’); but we cannot assume this would continue in a no deal scenario. It will not be possible to impose reciprocal obligations on MS when correcting deficiencies in the Coordination Regulations – such as requiring that they cooperate with the UK or provide information, or that they apply the rules contained in the Coordination Regulations to individuals moving to/from the UK.’

The UK has negotiated some reciprocal social security agreements in a bilateral basis with individual states, for example with Ireland, Switzerland, Norway, Iceland, and Lichtenstein. But these vary in scope and coverage.

As regards Social Security, the UK plans to legislate for an Immigration and Social Security (EU Withdrawal) Act but has yet to do so. Such an Act would give the UK Government powers to amend the EU law it had retained as part of UK law in the field of social security. But on what basis will it do so?

As regards Social Security, the UK has stated in a no deal policy paper (6 December 2018) that EU Citizens lawfully resident in the UK on the day leaves the EU will be able to continue to access in-country benefits ‘on broadly’ the same terms as now. That is not a commitment to providing the ‘same’ benefits.

As regards healthcare, the UK has passed a Healthcare (European Economic Area and Switzerland Arrangements) Act 2019, which gives the Secretary of State power to make payments for the cost of healthcare provided in another EU state, Norway, Iceland, Lichtenstein, or Switzerland. However, all will depend on what commitments to fund such healthcare the UK Government makes.

As regards pensions, the UK Government is committed to uprating the UK state pension for claimants living in EU states for three years only in the event of the UK leaving without a deal. Uprating beyond that date will be subject to the negotiations of new arrangements with the EU. Why?

The critical issue

As noted above, the critical issue is that co-ordination of social security, pensions, and healthcare is a cross-border problem that the UK cannot solve unilaterally. In a no deal scenario UK nationals in the EU will be subject to the rules applicable to third-country nationals from outside EU when accessing social security in their EU state of residence.

Equally, EU Citizens in the UK will be dependent on whatever the UK chose to provide and whatever measures their home state chooses to take to ease their lives in the UK. Social security, pensions, and healthcare are set primarily by each state rather than at EU level. Both in remaining EU states and in the UK, rights and entitlement would vary from state to state.

The degree of uncertainty makes if very difficult for EU Citizens in the UK and UK nationals in the remaining EU states to plan for their working lives, to settle properly, and to plan a future for their families. It’s no good cobbling something together at the last minute. People affected need the UK, other EU states and the EU institutions to take action now to provide full coverage in the field of Social Security, Healthcare and Pensions. There is a good system that works well at present. It needs to be preserved in all future scenarios.

One comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s