UK could be locked into paying EU staffer pensions until 2064 under Brexit deal

Brexit was a 'loss for everybody' says Guy Verhofstadt

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Brexit supporters knew a “divorce bill” was inevitable when the UK negotiated its exit from the EU after 47 years of membership. Various figures were touted by politicians in the UK and on the continent, with the expectation that around £40billion could need to be paid over time, though the Government denied the figure was that high.

But exactly why this money was needed, and what it would go towards, is less commonly understood.

In the latest OBR economic and fiscal outlook – published on March 23 – the watchdog only offers its “assumed annual path” of payments toward the EU financial settlement for the “forecast horizon – in this case, that’s up to 2027.

Here, the payments appear to complete before the end of the 2027 fiscal year – but a comparison with the same modelling completed in 2020 showed the same trend, only to have payments bounce back up.

So where is this money going? According to OBR data, the early years will see a large portion of the money going towards spending that the EU committed to while the UK was a member, but has not yet funded.

But as time goes on, the data shows the money will mostly go towards funding the pensions of EU staff.

The UK Government has indeed agreed to pay a share of liabilities for pensions of EU civil servants as part of the Withdrawal Agreement signed by Prime Minister Boris Johnson, which was passed by MPs in the House of Commons and came into law on January 31, 2020.

The Withdrawal Agreement states that, after the UK’s transition period ended in December 2021, it committed to paying “its fair share” of pension liabilities.

These constitute liabilities for “pension rights and rights to other employment-related benefits accrued on or before December 31, 2020”.

According to the OBR data set from 2020, these contributions are forecast to carry on until 2064 and will peak in 2030 and 2031, each with an annual total of £459million.

A spokesperson for the OBR told Express.co.uk: “These numbers are particularly uncertain and likely to be revised over time.”

Indeed, the latest OBR figures from 2022 show these totals reduced slightly, and again only offers data “within the forecast horizon”, until 2027.

But this conservative forecast alone shows the UK paying £1.4million toward EU staff pensions in the next five years.

Writing in a blog for Birmingham City University’s Centre for Brexit Studies in 2018, Professor John Clancy questioned the validity of this liability on behalf of the UK.

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He said: “Some would argue that the UK should be asking for a huge chunk of credit in today’s money to set against what it might then be judged to owe.

“Because when it joined the EU in 1973, there is an argument that the UK paid up straight away for pensions’ liabilities which had then been ‘incurred’ by the EU, and not by the UK.

“One justifiable reading of the position is that the UK took on and paid for those liabilities immediately, and it continued to pay up for them – for decades.

“Shouldn’t it now also drop, and stop paying for, alleged present ‘liabilities’ as it leaves?”

This topic is particularly relevant at a time when pensioners across the UK feel they’ve been let down by the Government, particularly after last week’s Spring Statement offered little in the way of support with the rising cost of living.

With inflation reaching record levels in the UK and the triple lock suspended, seeing millions being paid toward EU pensioners is a tough pill to swallow for many in Britain.

However, supporters of British sovereignty will be pleased to hear that it’s not all one-sided: the EU is liable for payments to the UK, too.

According to the OBR, the EU will send money back to the UK for things like its money to the European Investment Bank (just over £3billion) and the European Central Bank (about £50million).

The UK will also receive a share of any money paid to the EU in fines that were imposed before the end of 2020, which is estimated to be worth about £1.2billion.

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