Campaigners are fighting to end a 70-year reign of injustice that has resulted in more than half a million retired expats receiving a poor pension deal – simply because of where they live.
Those affected, backed by MPs, plan to fight the inequality by challenging a law that is waved through the backdoor each year and which repeatedly allows for overseas pensioners to be given a lower pension.
Some are losing out by more than £4,000 a year. People who paid the same rate of tax as their peers throughout their working lives and then moved abroad in retirement are being paid a lower State pension, depending on where they emigrated to.
For many years there have been reciprocal arrangements with certain countries, where pensioners are paid the full going rate. This includes countries in the European Economic Area. But those who moved to Australia, New Zealand, Canada and South Africa, among many others, are paid a pension frozen in time – whatever the rate was when they left home soil many years ago. A renewed push to overhaul outdated British policy is now underway with campaigners working to form a parliamentary alliance that can help address the imbalance. Every year the Government officially grants permission for the uprating of certain social security benefits, including the State pension.
It also quickly nods through regulations that exclude expat pensioners from this benefit. They are known as the Social Security Benefits Up-rating Regulations. These automatically become law unless a motion to reject them is raised and agreed by MPs.
The next opportunity to object will come in the spring – but problems arise because it is tied to other benefits that people need. This makes it harder for MPs to raise an objection without appearing as if they wish to deny people important benefit. A spokeswoman for the End Frozen Pensions campaign says: ‘By building a parliamentary alliance we will stop this Government trick and end the frozen pension policy.’
The All-Party Parliamentary Group on Frozen British Pensions has suggested ‘partial uprating’ as a compromise – an agreement to increase the State pension for people living abroad each year, but only from current levels. This is because a full uprating would be unpopular among MPs on cost grounds.
A partial uprating would help ease the damaging effect of inflation – because frozen pensions lose value in real terms year after year as the costs of goods and services rise. Estimates suggest the cost for this would be around £200 million a year by 2020 – less than half of what Chancellor Philip Hammond set aside to cover potholes in his recent Budget. Sir Roger Gale, Conservative MP for North Thanet in Kent and chairman of the parliamentary group on Frozen British Pensions, says: ‘There is a group of people who have served this country and paid their dues throughout their working lives who now find that their pensions are frozen. It leads to the anomaly where a pensioner living on one side of Niagara Falls has a frozen pension, while a pensioner living a few hundred yards away on the other side in the US has an uprated pension, annually. It is nonsense and iniquitous.’
Gale adds: ‘We are trying to achieve an understanding that we will uprate existing pensions at today’s rate from now on. It is not going to satisfy all the pensioners who understandably feel aggrieved, but we can establish the principle so over time we truly get this right.’
MPs who support revolting against current law say it has been allowed to continue for too long. Labour Co-op MP Alex Sobel calls it a ‘terrible injustice’. Stephen Pound, Labour MP for Ealing North, says: ‘It is disgraceful we treat people so badly who have given so much.’
The Department for Work and Pensions says it comes down to cost and that changing the rules would cost £500 million a year. But people living with a frozen pension point out that they do not use any services that drain money from central coffers – such as the National Health Service. Anne recently travelled from Canada to London to meet with MPs. Along with Monica and members of the International Consortium of British Pensioners she delivered a petition to 10 Downing Street backed by 218,660 signatures and urging the Government to reverse the inequality.
By Ian Sherlock
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