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Brexit: Pensions


Issues for occupational pension schemes, especially defined benefit schemes, include the following.

Economic effects

The most immediate implications for pension schemes (and sponsoring employers of defined benefit schemes) are in relation to the economic effects of Brexit, including the future relationship between the UK and the EU, on their asset and liability values.

Employer covenant

The strength of the employer covenant could also be affected: this informs decisions about funding and investment in defined benefit pension schemes.


Trustees of defined benefit pension schemes who have been given guarantees by companies resident in other EU member states should consider the ease of enforceability after Brexit.

Investment, etc.

We are monitoring developments that affect pension scheme investment arrangements.  This includes: the need to update agreements; the ability of investment managers to discharge their mandate after Brexit (for example if they are impeded from accessing EU markets or trading venues); and the extent to which EU legislation, such as the margining and collateral requirements of EMIR, will continue to affect UK pension schemes.

Scope for change

A good deal of UK pensions law derives from Europe, including legislation on equality, scheme funding, the Pension Protection Fund and other member protections.  The treaty and directive requirements have been transposed into national legislation and will not cease to apply on Brexit.  Repeals of legislation deriving from EU law are unlikely, certainly in the short to medium term.

Tax treatment

The tax treatment of pension contributions, investment returns and benefits will not be affected by Brexit.  HMRC may find it easier to allow employers to reclaim VAT paid on their scheme's investment management fees.

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