Much of UK pensions law is written into UK statute rather than in EU directives and will remain largely unchanged following Brexit.

Some areas have been influenced by EU treaty articles and various European Court decisions. The Directive on Institutions for Occupational Retirement Provision (IORP I), for example, was the first pensions directive and introduced ideas of appropriate investment and an objective of pension schemes becoming and remaining ‘fully funded’. A second directive, IORP II, dealt with improved governance requirements. As the UK implemented IORP I through the Pensions Act 2004 and IORP II through regulations in 2019, they will remain in force.

The greatest EU influence on pensions is in non-pensions law. For instance, discrimination law issues, such as the equal pay requirements of the EU treaties and the broader requirements of the Equal Treatment Directives, have given rise to a good deal of EU and UK case law relating to pensions. Most of this is covered in UK law, so would still apply after the UK leaves the EU and is likely to be maintained in the long term.

The Pensions Regulator (TPR)

Because workplace pensions are largely domestic in nature, TPR says it does not expect the UK’s departure from the 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’ scenario.

However, TPR has advised trustees of defined benefit pension schemes to prepare for Brexit by focussing on areas such as investment, employer covenant and administration. Trustees of defined contribution pension schemes should focus on areas such as investment, member communications and administration.

UK State Pension

The Department for Work and Pensions has issued guidance on benefits and pensions for UK nationals in the European Economic Area (EEA) or Switzerland, together with guidance on benefits and pensions for EEA and Swiss citizens in the UK. The guidance explains the rights to benefits and pensions after the UK has left the EU and confirms there will be no changes before 31 December 2020.

In particular, the guidance confirms that UK nationals living in an EEA state or Switzerland by 31 December 2020 will be covered by the Withdrawal Agreement and will get their UK State Pension uprated every year for as long as they continue to live in an EEA state or Switzerland. This will happen even if they start claiming their pension on or after 1 January 2021, as long as they meet the UK State Pension qualifying conditions.

Possible changes

The changes that may happen post-Brexit are to a few problem areas affecting pensions, as set out below.

Cross-border schemes

One major effect of the IORP directives has been the difficulties caused with pension schemes operating across more than one member state. Historically, there were a number of so-called Anglo-Irish schemes with UK and Irish members, which ceased operation due to the directives. The IORP provisions relating to the operation and funding of these schemes will cease to apply once the UK is no longer a member state, so cross-border schemes, between the UK and a member state, may be worth considering again.

Guaranteed Minimum Pension (GMP)

It was a European Court decision in 1990 (Barber C-262/88) that decided that the UK system of different retirement ages for men and women must be adjusted. The problems connected with the Barber decision took some years to resolve, and the problem reappeared in 2018 in Lloyds Banking Group Pensions Trustees Ltd v Lloyds Bank plc and others [2018] EWHC 2839 (Ch), when the High Court concluded that GMPs had made pensions unequal, and so extra pensions must be provided to equalise for this effect.

Pension schemes are in the process of dealing with GMP equalisation, as is the government, which must consider the issue for public sector schemes. The government may be tempted to legislate away this complex and expensive requirement.

Transfer of Undertakings (Protection of Employment) Regulations (TUPE)

The application of regulations requiring buying companies to observe the selling company employees’ employment rights under TUPE generally excludes occupational pensions. However, the exclusion has been held by two EU cases (Beckmann 2002 C-164/00 and Martin 2003 C-4/01) not to apply to pension benefits in certain circumstances, namely on early retirement or redundancy, resulting in an anomaly where an employee has no right to the continuation of a pension on the TUPE transfer, except if they then are made redundant or take early retirement.

A repeal of the regulations in their entirety is unlikely given how fundamental they are to UK business activity, but the issue of the pension rights that currently fall within TUPE and cause confusion as a result may be addressed.


Whether services provided to pension schemes are subject to VAT, and whether that VAT is able to be reclaimed by the sponsoring employer, has been the subject of a number of EU cases in recent years.

In particular, HMRC has imposed onerous conditions on the recovery of VAT on expenses, especially relating to investment, and the ability to challenge that position reduces greatly following Brexit. It may well be that the VAT treatment of pensions is simplified, in favour of HMRC, in the future.

General Data Protection Regulation (GDPR)

The GDPR has applied in the UK since 25 May 2018. It is supplemented in the UK by further UK legislation, which will continue to apply, so Brexit is unlikely to have a substantial impact on the data protection obligations of pension scheme trustees. However, Brexit will affect trustees’ ability to transfer data within the EEA. Trustees may therefore have to consider alternative transfer mechanisms to allow the free flow of data from the EEA to continue post-Brexit.

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