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Fierce arguments have run for years about the unfairness of state pension increases for expats who have made a new life overseas.
The topic has triggered a verdict from British and European courts and debates in Parliament. Still, the opposition has continued to rage against the government’s policy of only up-rating state pensions in countries with a legal requirement on the grounds that it would cost billions of pounds to do so.
Ministers argue that successive governments of all persuasions have maintained the policy and have no plans to extend the payment across all countries.
For the first time, the full extent of how frozen state pensions punish expats in the pocket has been revealed by the government.
The average expat is paid just £70.61 a week, with the lowest payment listed in Greenland of £23.21 and the highest of £166.77 in Azerbaijan.
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What Does Up-Rating The State Pension Mean?
Up-rating the state pension takes place each April at the start of the financial year.
The process is managed by the ‘triple-lock’, the government’s pledge to state pensioners that their annual payments will rise in line with the highest of three measures each year.
These measures are any increase in average earnings, the cost of living rises or a flat 2.5 per cent.
The reading for the following year’s up-rating is taken in September.
So, suppose the reading is average earnings rise two per cent, inflation is up nine per cent, and the flat rate is 2.5 per cent, up-rating is nine per cent.
Which Expats Get Up-Rated State Pensions?
Expats automatically have their state pension up-rated in April if they live in the European Economic Area, Switzerland and some select nations with a reciprocal social security agreement with the UK.
The EEA is the European Union plus Iceland, Norway and Liechtenstein.
The countries with reciprocal social security agreements with the UK are:
- Isle of Man
- Jersey and Guernsey
- New Zealand
- North Macedonia
- South Korea
Importantly, expats with up-rated state pensions receive the same increase each year as state pensioners in the UK.
How Much Is The State Pension?
How much state pension is paid depends on the date the recipient reaches state retirement age, how many qualifying years of national insurance contributions they have banked, and which country they live in.
Those reaching the state pension age before April 6, 2016, are paid the old state pension, while those reaching the milestone since that date pick up the new state pension.
For 2023/24, the full new state pension is £203.85 weekly (£10,600.20 yearly). Those on the old state pension are paid £156.20 weekly (£8,122.40 yearly).
Under the new state pension rules, claimants with less than 10 years of national insurance contributions banked receive no payment. With 35 qualifying years, the full state pension is paid, while those between 10 and 34 years are paid a proportionate amount.
For expats living in a country without a reciprocal social security agreement, the state pension amount is frozen at the level of the first payment.
For example, an expat in Thailand reaching state pension age in the 2023/24 financial year with 30 qualifying years of national insurance contributions has a first payment of £174.60 weekly. The payment remains at this level until the pensioner returns to live in the UK or dies.
The formula divides the full state pension amount by 35 (qualifying years), then multiplies the result by the number of banked qualifying years.
So, £203.85 divided by 35 is £5.82. Multiply £5.82 by the number of banked qualifying years – which is 30 in this example – giving a final figure of £174.60.
Global Average Expat State Pension Payments
Work and Pensions Under-Secretary Laura Trott has revealed the average state pension paid to expats for the first time in response to a written question in the Commons from independent MP Rob Roberts.
She revealed the average state pension paid to expats is just £70.61 weekly, compared with the maximum £203.85 paid to pensioners living in the UK.
Roberts also asked if the government had cost how much up-rating expat state pensions would have cost since 2010 and for a yearly up-rating forecast until 2030. Trott declined to answer, explaining the government did not keep these statistics.
Trott also posted a country-by-country breakdown for the first time:
|Country of Residence||Mean Weekly State Pension Amount|
|Abroad – Country not known||£112.62|
|Bosnia and Herzegovina||£73.12|
|Falkland Islands and Dependencies||£85.64|
|French Overseas Departments||£84.34|
|Isle of Man||£127.85|
|Nevis, St Kitts-Nevis||£75.56|
|Papua New Guinea||£75.49|
|Republic of Estonia||£78.98|
|Republic of Georgia||£129.54|
|Republic of Latvia||£68.34|
|Republic of Lithuania||£42.71|
|Republic of Slovenia||£60.38|
|Saint Helena & Dependencies||£89.27|
|St Vincent & Grenadines||£80.10|
|State Union of Serbia and Montenegro||£53.44|
|The Czech Republic||£92.30|
|The Slovak Republic||£49.82|
|Tours (Individuals on Tour)||£133.34|
|Trinidad & Tobago||£55.37|
|Turks and Caicos Islands||£118.32|
|United Arab Emirates||£107.46|
|United States Minor Outlying Islands||£75.89|
|Virgin Islands (British)||£91.77|
|Virgin Islands (USA)||£72.74|
Expat State Pension FAQ
Get answers to frequently asked questions about the state pension for expats, including eligibility, up-rating, and the impact of the triple lock formula.
Expats can claim the UK state pension from abroad. Expats must follow the same qualifying rules as UK pensioners, meaning the payment depends on the number of banked qualifying years, the date of reaching state pension age and where they live.
The state pension for expats has been frozen at the level of the first payment for more than 70 years. Payments are up-rated in the European Economic Area (EEA) and a select list of countries with reciprocal social security agreements with the UK.
A reciprocal social security agreement recognises contributions paid in the UK and another country when determining eligibility for benefits.
According to the Department of Work and Pensions, the government pays the state pension to around 1.2 million expats. The pension is increased in line with the cost of living hikes in the UK for 700,000 expats – but the remaining 500,000 are excluded from up-rating.
The triple lock formula for fixing state pension up-rating applies to everyone reaching state pension age, regardless of where they live.
Below is a list of related articles you may find of interest.
- Department of Work and Pensions (DWP) – Official UK government department responsible for state pension policies: www.gov.uk/government/organisations/department-for-work-pensions
- European Union – Information on the European Economic Area (EEA) and related agreements: www.europa.eu
- UK Parliament – Access to debates and discussions on state pension policies and related issues: www.parliament.uk