How to think about EU Pensions in the shadow of Brexit: A UK-Italy case study


If and when the UK leaves the EU, UK Nationals in the EU and other EU Citizens in the UK will have a lot to think about. Among the issues will be what happens to pension contributions and pension entitlements where they have worked in the UK and in another EU state. This issue is quite distinct from immigration issues such as whether a person has Settled Status in the UK or has naturalised as a British citizen.

I have written elsewhere on how the EU regulates the Co-ordination of Social Security, Pensions, and Healthcare; about the provision made under the EU-UK Withdrawal Agreement as regards such Co-ordination; and what will happen to Co-ordination in the event of No Deal. The purpose of this post is to focus in pensions alone and to illustrate some of the issues by examining what may happen as regards the UK and another EU State (Italy). There will be both UK Nationals and Italian Citizens who have lived and worked in each others’ countries. And both UK Nationals and Italian Citizens may decide to retire in the UK or Italy regardless of whether that is the last country in which they worked. What pension issues arise?

The UK State Pension

Entitlement to a UK state pension depends on a person’s national insurance contributions. However, in addition, at present the UK participates in the EU co-ordination of pension arrangements through Regulation 883/2004. The Regulation co-ordinates pension entitlements. Periods of insurance in more than one EU state can be added together (aggregated), so a person need only make one pension application in the country in which they live. In the UK a person applies for a pension to the International Pension Centre (IPC). The role of the IPC includes contacting the other EU states where the person has worked (or has been otherwise insured). Each state has to work out its contribution to the pension that is to be paid.

The UK state pension may be paid to people living outside the UK but it is only uprated (increased in line with increases paid to those living in the UK) where that person is living in another EU/EEA state or a state with which the UK has a reciprocal agreement. Thus, there are people in receiving UK state pensions in countries outside the EU, where their pension entitlements do not increase in line with the increases given to those living in the UK. This can lead to poverty for those affected as the cost of living increases over time while their pension does not.

The EU-UK Withdrawal Agreement 

The draft EU-UK Withdrawal Agreement preserves the current EU arrangements for those who falls within its scope at the end of the transition period (31 December 2020) to the extent specified in that Agreement, see my post on that topic. But for persons moving for the first time  between the UK and the EU after the end of the transition period, their pension rights will be subject to any future status agreement (if one is agreed). The Political Declaration accompanying the draft Withdrawal Agreement does not provide any detail as to the ambition for future pension arrangements for persons not within the scope of the Withdrawal Agreement.

No Deal

In the event of No Deal there are only limited contingency plans in the UK and in the rest of the EU and they are not reciprocal, see my post on that topic. In particular, the UK has only committed to up-rating the UK state pension for those living in other EU states until the year 2022-2023. Absent any new arrangements, for both UK Nationals and Italian Citizens who retire in Italy and draw a UK state pension after that time, there is no UK promise that the UK will continue to up-rate their UK state pensions in line with increases applied to those living in the UK. In addition, absent any co-ordination mechanism, each pension will need to be claimed separately in each country. In the event of No Deal, the question of whether Italy will update Italian pensions beneficiaries living in the UK will be a question for the Italian Government alone.

Pension Rules are made by each State

Another point to bear in mind is the criteria for entitlement to a state pension vary in each state. The UK and Italy each make their own rules for their own state pensions. Each state’s own criteria must be satisfied before any entitlement to its pension arises. Only once that it done, is there the possibility of co-ordinating those pension entitlements. For a UK state pension, 10 years of national insurance contributions are required to be eligible for the state pension. However, time spent in Italy or another EU state may be used to make up the qualifying years. Thus, five years working and being insured in the UK, together with five years working and being insured in Italy prior to coming to the UK, would be sufficient to ensure entitlement.

But be careful, the actual amount paid out by the UK state pension is based solely on the UK contributions on a pro-rata basis. Under UK law, a person who has worked for only 5 years in the UK would only get 5/35ths of the UK state pension. That is not very much money. She would need then to look to her Italian pension entitlement to see how much that would pay pro-rata.

Italian Pensions

Italy has its own rules for its own old-age and  retirement pensions, see Law 335/95. Longer periods of contributions, variously 20, 35 or even 40 years may be required. And the rate at which these pensions are paid out it determined by Italy under its own rules. An Italian Citizen in the UK would need to know whether she can use her time working in the UK to build a qualifying entitlement to an Italian pension. Even if she can, she would need to know as well, at what rate her Italian pension would pay out, given that she may only have worked in Italy for a limited period of her working life. These are issues that she must confront even if the EU-UK Withdrawal Agreement is ratified and put into effect.

No Deal or No Future Status Agreement covering Pensions

To return to the subject of No Deal arrangements, my earlier post covers the main issues. These issues would arise in the event of No Deal and also if the Withdrawal Agreement is ratified and provides for a transition period (ending 31 December 2019) but no future status agreement provides for pensions for those moving between the UK and the EU for the first time after the end of the transition period.  In such cases, there would be no provision for what is to happen as regards periods of residence, work, and payments of national insurance contributions (and their equivalent) that take place after the UK leaves the EU. 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? In a no-deal scenario, there will not be, as now, an Administrative Commission of the European Commission to oversee the working of the co-ordination of pensions. 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 UK-Italy Convention 

However, the UK has old reciprocal arrangements with some but not all EU states. Effectively these are in abeyance while the UK remains in the EU and subject to the Co-ordination Regulation 883/2004. However, in a No Deal situation they would come back into play. These reciprocal arrangements are regulated in UK law by section 179 of the Social Security Administration Act 1992. There is such a reciprocal arrangement between the UK and Italy. It is to be found in the National Insurance and Industrial Injuries (Reciprocal Agreement with Italy) Order 1953. Despite being of a certain vintage, it has been modified to be kept up to date with developments in UK pension law, see for example the Social Security (Reciprocal Agreements) Order 2016, SI 2016/158, which modifies it to include the provision made for the state pension under the Pensions Act 2014.

The National Insurance and Industrial Injuries (Reciprocal Agreement with Italy) Order 1953 gives effect to the 1953 Convention Between the United Kingdom of Great Britain and Northern Ireland and the Italian Republic on Social Insurance (the Convention). That Convention was agreed so ago it was signed by Alcide De Gasperi on behalf of Italy and Anthony Eden on behalf of the UK! It has limitations. For instance, it only governs the situation for those insured under the legislation of the UK and Italy; it does not cover UK Nationals and Italian Citizens for any time when insured under the laws of other EU states. But it does  have the virtue of extending to old age pensions, see Articles 14-16. What are its other pros and cons as compared to the EU Co-Ordination Regulation 883/2004?

In general, the Convention is more limited in its personal and material scope than the Co-Ordination Regulation. It contains a basic equal treatment provision (as between the nationals of each state), some facility for information sharing, and provision for a state to take periods of insurance in the other state into account when considering entitlement to its own pension. In addition, as with the Co-Ordination Regulation, payment appears to be on a pro-rata basis.

Article 16 of the Convention suggests that uprating of the pension of one state, where the person is living in the other state, may not be required. It speaks of receiving the pension at the ‘appropriate rate’ (not the ‘same rate’) which may leave the matter the laws of each country. Italy may not be obliged to up-rate Italian pensions for persons living in the UK in line with the up-rating that occurs for beneficiaries living in Italy. However, it is possible that ‘appropriate’ should be understood to mean at the rate payable to those living in Italy. At first blush, the matter is not free from doubt.

This brings the issue to the matter of who interprets the Convention where a dispute arises. The EU Co-Ordination Regulation has an Administrative Commission and provision for disputes to be resolved by the Court of Justice of the European Union. However, the Convention looks to Italy and the UK to resolve their disputes by negotiation (Article 36) and where that fails for there to be a process of binding arbitration (albeit by a circuitous route and only in default of negotiation). In a rich irony for Brexiteers, withdrawal on No Deal terms from the EU (a multilateral treaty arrangement), so as to escape the binding effect of the jurisdiction of the Court of Justice of the European Union, would result in being subject to a Convention (a bilateral treaty arrangement) subject to an arbitrator whose decision was binding. The fallacy of ‘taking back control’ by leaving the EU has no more pertinent illustration.


The Convention is more limited in scope and ambition than the EU Co-Ordination Regulation. It has a more limited personal scope, a more  limited territorial scope, and a more limited material scope. Further, it’s lacks a proper surveillance authority (like the Administrative Commission), and has a cumbersome, quasi-judicial dispute resolution mechanism.

The issues around pensions that are thrown up when examining the situation as between the UK and Italy show how much is at stake for nationals of both countries who has migrated and worked in each other’s territories.


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