Brexit: Impact on social security
Germany’s social insurance system is preparing for various exit scenarios, and has published information for insured persons, employers, workers and service providers.
KB – 01/2019
On 15 January 2019, the UK’s
House of Representatives rejected the Brexit agreement negotiated with the
European Union by a large majority. This was preceded by the referendum in June
2016, in which a small majority of UK citizens voted in favour of the UK
leaving the EU, and the UK formally invoking Article 50 on 29 March 2017. UK politicians are yet to find a new solution to
the Brexit dilemma, as we reported earlier (UK: Will
there be cross-party agreement?).
The various branches of Germany’s
social insurance system have published information on the various scenarios.
In the event of the
withdrawal agreement being accepted, the Regulations on the coordination of
social security systems, namely Regulations (EC) No 883/2004, (EC) No 987/2009
and (EC) No 859/2003, together with (EEC) No 1408/71 would continue to apply
for a transitional period until 31 December 2020; after this, new regulations
would have to be negotiated. Following the British Parliament’s rejection of
the withdrawal agreement, this option will only be considered through
renegotiation and resubmission to the parliaments in London and Brussels.
In the event of a no-deal
Brexit, the German-British Social Security Agreement of 20 April 1960 between
the Federal Republic of Germany and the United Kingdom might be applicable once
more from 30 March 2019, because the aforementioned regulations will cease to
apply to the United Kingdom from that date. This agreement is not as
comprehensive as the regulations mentioned above. For example, it does not
cover unemployment and long-term care insurance.
In the event of a
no-deal-Brexit, the Federal Government has submitted a draft ‘Act on
transitional arrangements in the areas of employment, education, health, social
affairs and citizenship following the withdrawal of the United Kingdom of Great
Britain and Northern Ireland from the European Union’ (BrexitSozSichÜG). The
relevant parliamentary procedure could be completed before 29 March 2019, with
the result that, following a no-deal exit from the EU, there will be a transitional
period of legal certainty in terms of insurance status and benefit entitlements
for all branches of insurance.
The draft Act states, for
example, that pensions which commenced prior to Brexit will continue to be paid
at their current level and British insurance periods will continue to be taken
into account when determining pension entitlements. However, the regulations do
not apply to persons who take up employment in the UK or Germany after Brexit.
Extend the deadline
Extending the deadline
for the withdrawal on 29 March 2019 would only be possible with the approval of
the 27 remaining EU Member States and for compelling reasons, such as a second
referendum or a new general election.
Finally, the United
Kingdom could decide to unilaterally cancel its Article 50 letter and stay in
the European Union without the consent of the other Member States (No Brexit),
unless a withdrawal agreement has already entered into force by then. This was
decided by the European Court of Justice on 10 December 2018 in its judgment
C-621/18. However, this is currently not on the cards because there is not
enough political backing for it.
More detailed information
on Brexit and Germany’s social insurance system is available here:
Statutory Health and
Long-Term Care Insurance (German only):
Insurance (German only): https://www.deutsche-rentenversicherung.de/Allgemein/de/Inhalt/0_Home/meldungen/2019_01_18_brexit_grossbritannien.html