No-deal Brexit will make it ‘illegal’ to pay pensions to retired British expats living in EU, MPs told

Warning comes as leading service industries say they have been 'thrown under the bus' by Theresa May’s Chequers plan

It could be “illegal” to pay private pensions to many retired British expats if the UK crashes out of the EU without a deal, MPs have been told.

The Association of British Insurers said pensioners who receive their payments into bank accounts in their adopted countries could be left without cash.

“That is a perfectly plausible risk in the future if no agreement is reached in some countries of the EU,” said Huw Evans, the ABI’s director general.

An alarmed Hilary Benn, the Brexit committee’s chairman, said: “They might find that they couldn’t be paid their pension – is that what you are saying?”

The warning came as Britain’s leading service industries attacked Theresa May’s Chequers plan for Brexit, the Commercial Broadcasters Association suggesting they had been “thrown under the bus”.

Those proposals would protect goods by keeping the UK tied to EU rules, but exclude services – even though they make up 80 per cent of the UK economy.

During the evidence session, Mr Evans also warned that tourists would be forced to pay more for health insurance because they would lose cross-EU insurance cards.

And he highlighted the threat that a staggering 38 million insurance contracts would be “left in legal limbo” because it would also be illegal to pay claims in EU countries.

“If a claim comes in two years down the line, in a country like Germany, their lawyers will be advising them you can’t pay the claim,” Mr Evans told the committee.

On the threat to insurance-based pensions, he said he wanted to “avoid panic”, acknowledging it would not be a consequence of no deal in all EU countries.

But he warned the UK would “end up as rule takers”, telling the MPs: “That is inherent in the approach the government has decided to take in its negotiating position.”

Mr Evans also suggested some company bosses were reluctant to speak out because those that did were “condemned by cabinet ministers”, saying: “That is not a comfortable position.”

In the white paper that followed the Chequers plan, the UK abandoned attempts to persuade the EU to grant “mutual recognition” to services after Brexit – settling instead for a lesser “equivalence” model.

But this will allow Brussels to deny market access rights if it decides the UK’s regulatory regime does not meet the EU’s standards.

Adam Minns, the executive director of the Commercial Broadcasters Association, condemned the shift as a “backward step”.

He said the UK currently boasted more international channels than any other EU country, a crucial factor being the ability to broadcast to the continent.

But a country such as the Netherlands – with its own tech hubs, excellent air links and with English commonly spoken – was perfectly placed to grab that dominance.

“We are not certain if we are being thrown under the bus, or have hit a temporary roadblock,” Mr Minns told the committee.

Asked if ministers understood the threat to service industries, he replied: “I don’t know – some do, some don’t.”

The City of London Corporation said it feared the consequences, for example, for solicitors unable to “fly in and out to provide advice”, but recognised the decision as “pragmatic”.