Estimated 500,000 expats have frozen pensions
Campaign groups in the UK are increasing their work to try to persuade the government to unlock frozen pensions for expat Brits around the world.
It is estimated that there are around 500,000 expat pensioners in 150 countries outside of the European Union whose state pensions are frozen at the level at which they are first drawn rather than rising as they do in the UK.
According to campaigners this means that hundreds of thousands of expats in countries like Australia and South Africa are experiencing a reduced quality of life as their only source of income is not keeping up with inflation.
According to the International Consortium of British Pensioners (ICBP) the system makes no economic sense as the government would save money from unused health and social benefits as more people would be willing to retire abroad.
A group of MP’s led by Conservative MP Penny Mordaunt has started a motion in the UK Parliament to ensure that pensions around the world move at the same rate. The motion so far has 38 signatories and has drawn support from all the major political parties.
Though the issue is getting more attention, a parliamentary question on the issue raised by Jeremy Corbyn MP in August was not answered.
Along with the ICBP he was aiming to get parliament to determine whether or not retirees with frozen pensions return to the UK or not. Anecdotal evidence suggests that individuals who retire in frozen jurisdictions are much further away and therefore less willing to uproot.
It is a key question as one of the primary reasons successive governments have refused to unfreeze pensions is the cited cost of expats from those countries returning to the UK.
However, the department for work and pensions decided it would be ‘disproportionately expensive’ to answer the question.
Expats campaigning for the changes cite the frozen rates as a form of discrimination, as those living in the United States and most of Europe do not have their state pensions frozen. They also cite the fact that they have paid national insurance contributions their entire working lives and are therefore entitled to the same pensions benefits as others.
This has caused particular problems in Canada, where the Canadian government are having to supplement pension payments at the cost of local tax payers, effectively bailing out the UK government millions of pounds every year.
David Harra, a senior market and investment analyst with Pryce Warner International, an overseas pensions provider for expats said it is unfair that those in Canada, Australia and elsewhere do not receive the same pension rates as those in Europe or the US.
‘With the low value of the pound and the frozen pensions rate it is more vital than ever that this issue be addresses and resolved by the British government. It simply makes no sense that pensioners in one country should have their pension rise along with the CPI yet others do not,’ he added.
Pryce Warner International Group have over 40 years experience providing International Investment and Asset Management as well as providing QROPS and QNUPS overseas pensions for expats worldwide. The QROPS Trustees used by Pryce Warner International Group in Guernsey are fully regulated and licensed by the Guernsey Financial Services Commission.
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{ 7 comments… read them below or add one }
The majority of frozen pensioners live in Australia and Canada where there are very good health systems comparable to, if not exceeding the British NHS system. If pensioners were encouraged to migrate to Commonwealth countries, through an uprated pension, it is likely that they would go there and stay there. When you need hospital treatment, it is better to have your friends and family around you, in say, Australia or Canada, than it is to be in a strange hospital in a strange place where you don't know anybody. Let's face it, most "health tourists" return from places like France and Spain where their pensions are already uprated each year as it is.
Lord Beveridge in his November 1942 report, on which the UK pension system was founded, established a fundamental principal, "all insured people, rich or poor, would pay the same contributions for the same security". UK governments past and present have renaged on their side of the contract entered into when compulsory National Insurance is collected to pay for pensions.This discrimination affects just 4% of State Pensioners as 96% of State Pensioners WORLDWIDE have the annual uprating yet ALL have met the requirements by paying into the NI fund. The surplus in the NI fund is currently £42 billion and government actuaries have forecast that it will increase to a total of £114 billion by 2012. This illogical unjust treatment of UK citizens must end now. Steve Webb, Minister of Pensions, who whilst in opposition promised to end this discrimination if David Cameron won the election, is ignoring the plight of the frozen pensioners who are now living in poverty because of this injustice. Shame on you Mr Webb.
Mr Cameron in his speech at the Conservative Conference, when referring to the UK's place in the world market emphasised the Governments policy to strengthen the UKs ties with the Commonwealth. (no actual mention of the frozen pensioners) So will that mean that the frozen pensions discrimination will at last be ended? We all hope so. Perhaps even Mr. Webb will be forced to change his tune. One thought crosses my mind, What about the remaining frozen pensions in non Commonwealth countries? Will the existing minority (4%) of pensioners (frozen) become an even smaller minority? Or will the efforts of the ICBP and BPiA etc, to gain pension parity for ALL pensioners be strong enough to force the UK Government to accept that the even smaller minority will not be swept under the carpet?
In reply to Mr. Phillips comment "If pensioners were encouraged to migrate to Commonwealth countries, through an uprated pension, it is likely that they would go there and stay there". Might I suggest that the Government could be considered as already encouraging people to migrate by the policy of higher taxes, cut backs and more cut backs, restrictions on top of restrictiona etc etc!! To upprate pensions now is such an obvious thing to do. It would save the Government billions of pounds, (which would increase annually ad infinitum), make more housing available, Free up hospital beds thus reducing the waiting time to get a bed from months to days. The list goes on.
It is so obvious that for a comparatively low outlay initialy of £640 million the savings will quite quickly be in the billions which can then be used to create a better Britain. As obvious as the nose on your face! Perhaps we should donate a mirror to the Government so they can see it as well!
MPs Minsters and mandarins are saying that the country can't afford to index our pensions. But even in prosperous times they did not do it. This is not an economic matter, but a moral one. Many times MPs in opposition have promised to fix it, but quickly changed their minds when they got into government. Principles go overboard in deference to votes. Even the economic arguments now being put forward by ICBP are ignored. What the MPs fear is that it will be an unpopular move among pensioners, who will think it is cutting into the money available for them. In fact encouraging pensioners to emigrate would save the country a lot of money, far more than the cost of pension indexation.
Ian Duncan Smith describes Steve Webbs work as pensions minister " As nothing short of remarkable" ! Steve Webb declares he is "Passionate about pensions and the issues facing older people" He also says" The government wants all pensioners to have a decent and secure income in retirement". Those statements are made in the full knowledge that they are at the same time discriminating against just 4%of state pensioners by freezing their pensions and so condeming them to poverty. That Steve Webb can stand up and say he cares about ALL pensioners having a decent standard of living and never even mentioning the 4% says more about the man than Ian Duncan Smith's comment on him. Lies Mr Webb nothing more nothing less, lies and theft is the reality and we all know it and deep down you know it too.
Shame, I have followed this story and am struck with unbelief about how our society continues to treat our old people. Not only denied their rights to a retirement without Want but also fed so many untruths. I myself, was never made aware of any implications of future pension problems when I got on my bike and found a job (even if it was in Australia) Thanks Maggie Thatcher and Norman Tebbitt. There was no work in the UK for my children in 1989. I am English and no I didnt choose to live in an easier place. The pension situation is all Lies, and theft is the reality. On another matter where was it announced that there was an end to reciprocal agreements? Didnt the public have a right to know and shouldn't they have been informed? Happy to help the campaign if needed.