The British government has offloaded the financial responsibility for expat pensioners on to foreign governments rather than unfreezing the state pension, according to a cross-party report from the UK Parliament.
In a damning condemnation of British pension policy, the All-Party Parliamentary Group (APPG) on Frozen British Pensions claims successive governments in Canada, Australia and New Zealand have tried to resolve the issue of who pays for retired expats with Britain for 30 years without success.
The report also reveals the frozen pension problem impacts 510,000 British state pensioners abroad – with one in three living in Australia or Canada.
Half are paid just £65 a week compared with the current state pension payment of £175.20 a week in the UK and European Economic Area.
The Expat State Pension Issue
The problem is how the British government uprates expat state pensions.
Uprating is when the state pension increases due to the rising cost of living.
The state pension is only uprated for expats living in the European Economic Area (EEA) or 17 countries with social security agreements with the UK.
The places with social security agreements with Britain are:
|Gibraltar||Guernsey||Isle of Man|
|North Macedonia||The Philippines||Serbia|
These countries account for around 850,000 of the estimated British expat population of 5.5 million.
For expats claiming the state pension living elsewhere, the payment is frozen at the level of the first payment.
APPG researchers spoke to 2,567 British expats in countries where the state pension is frozen and discovered:
- 40% of expats with frozen state pensions are former public servants in the UK, while 16% are UK military veterans
- 49% are paid £65 a week or less by the UK government
- 51% confessed they struggle financially because of their frozen pension
- 58% said their finances were worsened because they and their partner are both paid a frozen state pension
- 55% receive financial support due to their pension plight in the country where they now live
- 46% have had to take a job to supplement their state pension.
Working pensioners include 81-year-old Peter Sanguinetti who drives a school bus to help pay the bills and 80-year-old John Owen-Ellis, who worked full time until he was 72 and now works part-time to make ends meet
- 40% live with a chronic illness
Frozen Pensions And The Windrush Generation
More than 90% of those living on a frozen state pension live in a Commonwealth country with close cultural and political ties to Britain.
Many were invited to Britain as part of the Windrush Generation and later retired back to their home countries.
The report reveals the plight of Monica Philip, aged 82, who emigrated from Antigua to the UK in 1959. She worked as a civil servant for 37 years before returning to the Caribbean to care for her sick mother.
Her state pension was frozen at £74.11 a week, while her sister who still lives in the UK receives the full state pension.
The African Diaspora and Descent Network Civil Service UK told researchers the frozen state pension paid to black pensioners living in Africa and the Caribbean was a national shame.
Frozen State Pension Snub For Foreign Governments
Britain has refused to engage with foreign governments over the issue of frozen state pension payments for 30 years, says the APPG report.
Officials in Canada, Australia and New Zealand argue that they are left to top-up incomes for British expat pensions because of the policy.
Politicians in Canada and Australia also point out that Britain is the only developed country paying state pensioners differently based on where they live.
Australia says the government has repeatedly tried to discuss the issue with Britain.
The country is the top overseas destination for expats, with at least 1.3 million former Brits living there. Australian state pensioneers in the UK have their pensions uprated automatically.
““The Australian government has been working to resolve this issue for some time, given the policy
affects many expatriate pensioners living in Australia. The government has made a series of
representations to the UK government in recent years, including at ministerial level. We will
continue to advocate our position to the UK government,” said a spokesman.
Canada also says the British government has ignore all attempts to try and resolve the issue for 30 years.
The former Commonwealth country is the fourth favourite overseas destination for British expats with more than 600,000 Brits calling Canada home. Canadian pensioners abroad are paid a full up rated pension.
“Over the years, the Government of Canada has raised, and has sought to address, this issue with
the UK, including by proposing the two countries negotiate a comprehensive social security
agreement that would provide for the indexation of UK pensions,” said a spokesman.
“To date, UK officials have not engaged on this issue. As it has done in the past, the government of Canada will continue to raise this issue with the UK through various channels, where appropriate.”
The New Zealand government told the APPG that British expats have their frozen state pensions topped up a level which ‘supplements the pension to ensure the overall level of pension income matches the NZ standard rate.’
What The Report Recommends
The Frozen British Pensions report includes several recommendations, including:
- Calling for a government review of the frozen pensions policy
- Making sure every armed forces veteran is paid an adequate pension regardless of where they live
- Examining the impact of frozen pensions on the Windrush Generation
- Opening talks with foreign governments aimed at entering reciprocal social security agreements or unilateral uprating for British expat state pensioners
How The UK Government Justifies Freezing Pensions
The government has defended freezing state pensions with three main arguments in recent years:
- State pensioners in the UK should have priority over those living abroad
- Expats moving to a country where the state pension is frozen chose to go there knowing the financial implications
- The cost of uprating state pensions across the board is prohibitive
The APPG argues all British state pensioners should be treated the same wherever they choose to live.
The group’s researchers were also told by 90% of expats interviewed about their state pensions that they were not told and were not aware their payments would be frozen if they moved overseas.
Calculations in the report also suggest the yearly cost of uprating expat state pensions would likely come to around £600 million – about 0.3% of the total annual budget of the Department of Work & Pensions.
In a letter to the APPG chairman Sir Roger Gale, Pensions minister Guy Opperman clearly ignores the report recommendations.
“The government understands that people move abroad for many reasons and that this can have an impact on their finances. However, information is provided in leaflets and on www.gov.uk that the UK state pension is not up-rated overseas except where there is a legal requirement to do so,” he said.
“The government continues to believe that priority should be given to those living in Great Britain when it comes to expenditure on pensioner benefits. As such, the government has no plans to alter its policy regarding the payment of the UK state pension overseas.”
Frozen State Pension FAQ
Expats have voiced their anger about the frozen UK state pension for many years.
The protests went to the European Court of Human Rights, claiming the policy discriminated against expats.
The court dismissed the argument saying the policy was not discriminatory because they had made social security payments while working in the UK as these payments were pooled to pay for several benefits and the amount going towards a pension was impossible to identify.
The ECHR also explained the state pension was designed to a minimum income for pensioners in the UK, not those choosing to live overseas.
The British government has agreed to uprate the state pensions of expats already living in Europe before the transition period ended on December 31, 2020 and has hinted that a reciprocal social security agreement covering state pensions and other benefits should be negotiated soon.
Yes. Expat state pensions are uprated with the same formula applied to UK state pensions, so the triple lock applies.
The triple lock is a guarantee that the state pension increases each year in line with the highest of:
The annual Consumer Price Index inflation rate, the annual increase in average wages, 2.5%
The rules for expats drawing the state pension are the same as those for anyone in the UK regardless of where they live.
The state pension age depends on your age. A handy free online tool will give your state pension age.
If an expat returns to the UK permanently, the state pension reverts to the level it would have reached if the payment was not frozen, but no back payments are made for the time spent overseas
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