State pensions are seething over what they believe is a stab in the back from the British government.
Thousands left Britain to start a new life in a place in the sun believing they would be entitled to a full state pension when they reached retirement.
Now, they have found out that their financial plans are likely to be in shreds because state pension qualification rules have changed since they left.
Many expats left for destinations like Australia counting on picking up the full state pension payment as they had the 30 years of employment needed to qualify.
However, with the advent of the new flat rate pension, the number of qualifying years has been upped from 30 to 35 years, meaning many who were relying on the full state pension to finance their retirement will now be paid a reduced amount of money.
The Pensions Advisory Service, a non-profit government agency, gives free retirement advice.
Qualifying years explained
A spokesman explained how the new qualifying years rule affects expat state pensioners.
“How the qualifying rule impacts on an individual’s state pension depends on the age they start receiving the money,” said the spokesman.
“If that’s before April 6, 2016, their pension will be calculated under the current rules, which allow the full pension for 30 qualifying years and that will carry forward to let them qualify for a full payment under the new rules.
“If they retire on April 6, 2016 or later, then the payment will be worked out on the35 years of qualification rules.
“Anyone who does not have enough qualifying years can buy more.”
The British Pensions in Australia (BPiA) has joined the International Consortium of British Pensions (ICBP) in calling for the British government fairer state pensions to expats.
Frozen state pensions
Many are still angry over ‘frozen pensions’ they receive that are set at the level of the first payment without any index-linking because the country where they now live has no agreement with the UK to uplift the value of their pensions.
Meanwhile pensioners in the European Union and some countries with agreements with the UK receive their state pensions index-linked.
The government has stubbornly refused to increase the frozen state pension after winning a European court case over the matter.
“Expats knew the state pension rules when they left the UK and should budget accordingly,” said a Department of Works and Pensions spokesman.
The agreement should be looked at closely as an excuse because the agreement with respect to the state pension is between the pensioner (ex-contributor) and the government and nothing to do with the country of residence in retirement. The government have admitted that an agreement is not necessary. To pay some ex-pats (ie. 650,000 ) the indexed pension when they are living outside of the UK but not pay the rest (560,000) in the same way is discrimination pure and simple.
As for the remark by you Jim Atkins about “starting a new life in the sun” you might be right for a minority but for most it was to join family who had moved abroad or because they had spent a large proportion of their life working for a company abroad in the interest of the British government but continued paying the mandatory contributions to qualify for their indexed pension. Others probably left for health reasons.This freezing was never advertised before the coming of the internet and many others who were in touch with the Pensions Office were not told since then. When you started work Jim, were you told that should you retire abroad that your pension could be frozen ? No !
Why should I who paid my contributions for 44 years not receive the indexing to my pension? All pensioners abroad are assessable for income tax and these pensioners are not a liability in respect to the NHS, prescriptions, bus passes, TV licence and other benefits that are enjoyed by those resident in the UK which is a massive saving for the government to the tune of about GBP 3,500 per year even after paying the indexing.
The government should be encouraging pensioners to emigrate to reduce the cost of these benefits which would also free up housing which is at a premium. Some pensioners occupying fair size houses but are scared to emigrate and see their pension effectively decrease and poverty loom as the years go by.
No there is no excuse for this draconian policy in the 21st century and the members of parliament have a duty to treat all citizens equally and fairly without fear or favour irrespective of their country of residence.
This is also why the vote should still be available to all ex-pats because the government control their taxes and pensions and they should have some recourse to those in charge but that;’s another story..
start a new life in a place in the sun
start a new life in a place in the sun
start a new life in a place in the sun
Morgeo, in the comment below, has really added a considerable amount of flesh (and odd correction!) to the bones of contention Jim Atkins has highlighted in the article.
The moving of the goalposts by, Steve Webb, the Pensions Minister – has he his own set on wheels? – and increasing the qualifying period from 30 to 35 years is yet another government inspired torpedo to the retirement plans and budgets of so many and not just those who wish or have already emigrated but also those residing in the UK. Equally, too, one must not overlook that widowed spouse’s pensions based on the their late partners’ NI contributions are also being withdrawn…and all this from a government that extolls the virtues of planning for one’s retirement….
As far as the frozen pensions issue is concerned not everybody has a new life in the sun…in Calgary, Canada the winter temperature often reaches minus 25 with a couple or more feet of snow, so not only are pensioners living there lıterally frozen but so, too, are their pensions (and no WFA, of course!). Any change in the qualifying years requiremnt is, unfortunately, going to catch some people on the wrong side of the line but there is a possible opportunity to make good the loss; this is not the case for the frozen pensioner.
Once the retirement pension becomes payable in the host country it is frozen at that rate evermore…ıt wıll be ıncreasesd to the approprıate current level for the duratıon of a vısıt back to the UK or, as may well be happenıng, the pensıoner ıs forced by the fınancıal constraınts of pensıon freezıng to return permanently.
Webb and the DWP make great play of the so called reciprocal or bi-lateral agreements but in a Freedom of Information disclosure the DWP has confirmed that such agreements are not necessary to facilitate the universal index linking of the UK State Retirement Pension…just a simple stroke of a pen to amend a parliamentary regulation..not even a change in law. Cameron has already admitted that the UK “is a wealthy country”; it is not ony his government’s disgrace that it shirks its obligations and abandons some of ıts pensioners but also that of the Blair/Brown adminıstration who opposed the case in the courts…and where it was somewhat questionably found not to be in breach of the UK law but equally to implement uprating would not be illegal or morally unjustifiable either; a parliamentary decısıon not a legal matter. .
The statement by the DWP spokesman about expats knowing before they emigrated the implication for their pension has been demonstrated time and again to be quite untrue. Only recently has it started to appear on the internet. But it is quite irrelevant really because whether one knew or did not know about the freezing policy does not alter the fact,.as Webb himself has said, that the policy is illogical, irrational, discriminatory and an anomaly.