On February 1st, 2020, the Withdrawal Agreement between the EU and the UK entered into force and brings Brexit to life. It foresees a transition period going on until December 31st, 2020. As is true for the other EU/EFTA as well as Switzerland, the UK’s social security system used to be coordinated with those of the other member States. The UK's decision to leave the EU has brought forward major changes with regards to the applicable social security regulations, as Switzerland is bilaterally applying such rules.
In the meantime, the UK and Switzerland have reached an ad hoc Agreement, which protects the rights of Swiss and UK nationals acquired prior the end of the transition period, i.e. December 31st, 2020.
Nearly 35’400 Swiss people are living in the UK, and around 41’400 UK people are resident in Switzerland. What’s next for them when it comes to social security?
Applicable rules remain as is during the transition period ending December 31, 2020
As the UK will remain bound by existing EU agreements with Switzerland, including the FMoPA, until year-end and will still be regarded as an EU member-state in term of to social security, nothing will change immediately for Swiss and UK nationals who can continue to live, work and move to in both countries.
An individual who is on temporary assignment from Switzerland to the UK (or vice-versa) initiated before Brexit, can continue to rely on their existing applicable law and related certificate of coverage (A1 portable document) to keep home country social security coverage in the UK or Switzerland respectively.
On top of that, individuals who travel for business between Switzerland and the UK from February 1st, 2020 to December 31st, 2020 can still apply for an be able to apply for an A1 their home country to ensure they are properly affiliated even if working in at least 2 countries applying EU coordinated regulation. Extension application re. A1 for up to 24 months from its start date remains possible.
With regards to the workforce in mobile situation before end of 2020, the totalization and aggregation of contribution, work or residency periods also continue to operate in its current form. This allows the individual with a cross-border working record to obtain entitlement to cash benefits in their country of residence (either in Switzerland or in the UK).
After the transition period: what’s next on January 1st, 2021?
At the end of the transitional period of December 31st, 2020, the UK will no longer be regarded as an EU member-state. The Free Movement of Persons will no longer apply to relations between Switzerland and the UK, accordingly. To address separation issues and guarantee the rights that insured people have legally acquired before Brexit, a CH/UK Agreement has been signed-off on October 31st, 2019.
The Swiss/UK deal protects the rights of the 41’400 UK nationals living in Switzerland, 35’400 Swiss nationals living in the UK, and around 4’600 UK nationals who are frontier worker to Switzerland. People who acquired social security rights before December 31st, 2020 will not be disadvantaged in their access to pensions, benefits and other forms of social security, including healthcare cover and will enjoy lifelong rights.
Enforcement of the protection of acquired rights prior to December 31st, 2020
Nothing changes for UK or Swiss people as long as they are in a cross-border situation, i.e. as long as there is a connection to both states with regard to the nationality, activity or residence prior to the end of this year. Concretely speaking, this means the following:
- The same country remains competent for social security registration, contributions payment and provides benefits without discrimination.
- Access to healthcare is guaranteed on a non-discriminatory basis. In the case of residence in the other country, there is still a right to healthcare at the expense of the competent State. The European Health Insurance Card remains valid for holidays in the other country.
- Family benefits will continue to be paid without restriction to children resident in the other country, including children born after 2020.
- n case of unemployment occurring after 2020, there is an entitlement to unemployment benefit. If necessary, benefits are exported for the permitted period in order to look for a job in the other country.
- In case for retirement after Brexit transition period, the CH/UK Agreement allow entitlement to a pension in accordance with national legislation. Insurance periods completed in the other country are considered for the fulfilment of the minimum insurance period and the pension continues to be paid without restriction (even in case of residence to the other country). In this case, health insurance cover is also guaranteed by one of the two states.
- Disability pensions are also paid in the case of residence in the other state and survivors' pensions are also paid to survivors’ resident in the other state.
Other specific situations in which social security protection is guaranteed after December 31st, 2020 are:
- Health insurance: people spending holidays in the UK or in Switzerland end of 2020, the European Health Insurance Card shall continue to apply until the end of their holiday.
- in the other country can still use the European Health Insurance Card even if they continue their studies after December 31, 2020.
- who receive a pension from one country on December 31st, 2020 and who reside in the other country and are entitled to reimbursement of healthcare provided by the state paying the pension are still entitled to this reimbursement.
- Planned treatments started before December 31st, 2020 date may be and will be reimbursed.
- Pension insurance: for people are not in a cross-border situation on on December 31st, 2020 but were previously, the periods of insurance completed before and on December 31st, 2020 date are taken into account for the acquisition of a Swiss or a UK pension. Their pensions can also be exported to the other country.
- Family benefits: people who are not in a cross-border situation on December 31st, 2020 but who are entitled to family benefits for children residing in the other country are still entitled to family benefits.
What’s about the future regime between Switzerland and the UK?
As of January 1st, 2021, it is certain that that FMoPA and all related EU regulations will no longer be into force. As such, the UK will be considered a “third country” in terms of its relationship with Switzerland. When it comes to new mobile situation between the UK and Switzerland initiated after December 31st, 2020, it falls to uncertainty. The future coordination of social security rules between Switzerland and the UK is not set yet.
If no new rules could be agreed upon, we will be back to the application of the “old” UK/Swiss Social Security Agreement, dated February 21st, 1968. Implemented at the end of the 60’s, that agreement is out of date in the sense that it is not addressing the multiple social security aspect of mobile workforce deployment. Its scope of application is limited to retirement coverage, setting rules in term of contribution payment and benefits entitlement. Additionally, it guarantees the export of pensions.
Stay tuned as more news will follow as soon as update will be released.
Action to be taken
It is worth reviewing Swiss and UK cross-border workforce, and ongoing transition Brexit period and post-Brexit period will trigger multiple changes and challenges to address.
While no immediate action needs to be taken, it is worthwhile to start planning actions that could be taken as of January 1st, 2021 to mitigate uncertainty.
Contemplating staff moves or relocation prior to end of 2020 might be valuable, to be able to still benefit of the CH/UK Agreement and its acquired right enhanced protection.
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Finally, feel free to visit RSM UK’s Brexit webpage (https://www.rsmuk.com/ideas-and-insights/brexit), where you can find insights on the critical areas of taxation, strategic business planning, talent and people matters, as well as regulatory impacts and trade deal announcements.