Brexit - Pensions
Employers with internationally mobile employees
As explained under the heading “employment”, Brexit may have a serious impact on the automatic right to travel and work freely across the EU.
This would have consequences for UK employers with employees (temporarily) working in Belgium and for Belgian employers with employees (temporarily) working in the UK.
Besides potential additional formalities related to organizing such international employment, Brexit may also affect the pension entitlement of such employees.
If EU regulations no longer apply, it will not only have to be verified which legal pension rights the employees build up while (temporarily) working abroad, it will also have to be verified to what occupational pension scheme the employees are to be affiliated while (temporarily) working abroad and what the potential tax implications are.
Pan-European Pension Funds
The IORP I Directive 2003/41 allowed the setting-up of cross-border pension funds within the European Union. On 23 December 2016, the IORP II Directive 2016/2341 (updating the IORP I Directive) was published in the Official Journal of the European Union. The IORP II Directive must be implemented at the latest by 13 January 2019. Taking into account the Brexit timing, it is still to be seen whether or not the UK will implement the IORP II Directive prior to leaving the EU.
Brexit may have an impact on UK-based pension funds managing pension plans in Belgium and on Belgian-based pension funds managing pension plans in the UK. It will have to be verified under which conditions these pension funds will be able to continue their cross-border activities or whether the sponsoring employers will have to find other solutions.
Of course, Belgian (pan-European) Pension Funds will also have to verify their commercial contracts with UK service providers (e.g. asset managers). Reference is made to the headings “commercial”.
Pensions and data protection
Also in relation to pensions, data protection is an important topic. After the effective date of Brexit, the UK will become a 'third country': if pension data is to be transferred from Belgium to the UK, adequate protection for the rights of employees will have to be guaranteed (EU model clauses or an EU-UK Privacy Shield).
- Keep a close watch on the negotiation process and future changes in (international) employment/social security/pensions legislation and be prepared to respond swiftly to any developments
- Map your expat workforce and prepare the post-Brexit reality in relation to pensions
- Review cross-border employment (expat-secondment) contracts between Belgium and the UK
- Check commercial contracts with UK service providers
- Check status of GDPR and be prepared for transfer of data to a third country
- Review your contracts with UK third-party providers on data protection compliance