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Pensions offer cold comfort abroad when frozen in time
British people who want to live abroad in retirement don’t necessarily realise how it may affect their state pension. Sheena Hastings reports.
RALPH Clegg, now 82, was a policeman in Leeds when the government asked for officers with experience of Africa to go to Kenya to fight against the Mau Mau in the rebellion that lasted from 1952 until 1960.
Ralph volunteered because he had served in Kenya in the Army during the war. He worked with the police over there for three years, and stayed on to work in local government afterwards, marrying and returned to UK when Kenya gained independence. In 1970, after jobs in various businesses, prospects looked bleak in Britain so the Cleggs moved to South Africa. At the time the government was encouraging Britons to emigrate and even offering cheap fares to some countries.
“I volunteered to go, and now I am reaping the benefits of helping our country – my pension is frozen at just £60 a week, “ says Ralph, who is now a widower living in a care home.
“I can hardly afford to stay at the retirement home I live in and have to rely on the kindness of my children to make ends meet. Any savings I had were spent on my wife’s cancer treatment. I fought for my country when I was still a teenager, paid all National Insurance contributions that I could and kept my British citizenship, but it seems it was all for nothing.” The full British state pension is £156.15 a week.
New research carried out for the International Consortium of British Pensioners (ICBP) has found that 53 per cent of middle-aged people aged 45-65 in Yorkshire would consider retiring abroad; however 60 per cent of them are unaware that their pension will be frozen if they move to one of over 120 countries.
A fifth have children overseas making a move abroad liely.
‘Frozen’ means that pension payment stays at the rate paid in the first year the person receives it in the country they have retired to, with no entitlement to future increases for which those living in the UK are eligible. The freeze applies to popular retirement destinations such as New Zealand, Australia and Canada.
The ICBP has launched a petition for people to call for a House of Commons debate on this issue, calling also for the removal of the clauses relevant to the pension freeze to be removed from the Pensions Bill currently making its way through parliament.
The consortium argues that unfreezing the pensions of all British people living abroad would, in the long-term, benefit our economy, as people living abroad put less pressure on public services and housing here. Oxford Economics research shows that in 2011 the net benefit to the Treasury of a pensioner moving abroad wass £2,500 a year.
“This situation has existed since the days of Harold Wilson,” says John Markham, UK parliamentary director of ICBP.
“There were two key influences – the government concluded that it had to bring the state pension scheme up to date with annual increases in line with inflation and the fact that there was a sterling crisis going on.”
Whitehall said British people retiring abroad or going abroad after retirement would not receive pension increases unless a reciprocal agreement was made with the country they lived in. Sixteen countries signed such an agreement, including Guernsey and Jersey, the US and the Phillipines.
Markham himself is 78, and he has been living in Canada since before he was 65. His pension is the same now as they day he first received it, whereas the 130,000 Brits who live over the border in the US receive regular increases.
The Consortium is not seeking backdating of pension increases.
“The frozen pension policy actively discourages those who have worked hard all their lives and paid their national insurance contributions from moving to join their children. It also means that half a million people currently affected have to live out their old age in destitution, rather than dignity. This must change.”
A Department of Work and Pensions spokesperson said: “The State Pension is uprated throughout the European Economic Area and in countries where we have reciprocal social security agreements.
“People who are considering emigrating abroad should always consider the impact the move could have on their future state pension entitlement.”
Around 1,160,000 UK State Pensions are paid to those living overseas; around 550,000 are in frozen rate countries. In 2008/09 the UK spent an estimated £2.7bn (in 2010/11 prices) on State Pensions paid overseas; around £980m was paid in frozen rate countries.
To sign the e-petition go to http://bit.ly/BritPensions
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Comments
There are 4 comments to this article
Page 1 of 1
jimtilley
Sunday, September 25, 2011 at 03:38 AMBefore reaching pension age I was invited by Inland Revenue to make further contributions to better my pension and even though I gave the Government Department my address in Australia, no mention was made that when I received a pension it would be frozen. In effect I was given the offer under false pretences. The UK Parliament Select Committee report on the pensions stated; "Surely no one would have deliberately designed a policy of paying pensions to people living abroad to end up in the position we are at today!" This indicate an embarrassment of this situation, but nothing has been done to fix it. The Government complains of the cost £600 million to pay everyone fairly but do not admit that the NI account has a balance of £40+ billion. This is a social injustice which we, the ICBP, will take to CHOGM Perth WA to expose British miserliness and their violation of the CHOGM declarations of Singapore 1971 and Harare 1991 which calls Commonwealth members "to use all our efforts to foster equality and dignity everywhere". There is no equality being fostered by Britain among its expats living in many Commonwealth countries.
Robthefox
Saturday, September 24, 2011 at 06:08 AMThe very simple point at issue here is the lack of moral justification in freezing state retirement pension to anyone solely on the basis of what country they choose to spend their retirement. I lived and worked in the UK up until age 60 and during that time paid my taxes and NI Contributions under the same terms and conditions as everyone else. I qualified for a full pension but because I live in a frozen country it is now frozen at the level being paid when I emigrated. Logic and moral justice decree I should be allowed to draw on that fund under the same terms and conditions as everyone else ie UK and EU residents and those in countries with the so called reciprocal agreement. The DWP spokesperson said those intending to retire abroad should find out the implications for their pension...in fifteen years of correspondence - yes fifteen years - and although advised that I intended to live abroad, that I had moved abroad at sixty and that as I was nearing 65 I required a Pensions Estimate NOT ONCE was I advised of this freezing. As if to compound matters recent correspondence with some Members of Parliament have revealed an astonishing lack of knowledge on the subject..to the extent that one has denied the existence of a National Insurance Fund (it was set up in 1946), another has claimed we shouldn't get the indexation increases as we don't pay taxes..I have news for him... and yet another claims that we do not contribute to the UK economy! Well apart from being assessable for UK tax, the savings on our National Health bills and all the other subsidies we cannot claim, I suppose that we don't....rather like the British Pensioner in the USA, who of course, is index linked. In simple terms IF YOU ARE INTERESTED IN JUSTICE FOR THE FROZEN PENSIONER SIGN THE PETITION.
morlege
Saturday, September 24, 2011 at 03:55 AMI am one of those frozen pensioners and we all were a generation that saw the war at home or abroad and had to cope with rationing after the war up until 1952. Throughout our working life we all paid our taxes and National Insurance patments which were mandatory expecting to receive the same pension as everyone else. Also there was the leaselend to be repaid to Canada and the USA. We paid that off which took until 2006. Now many have to try and survive the indignity of sliding into poverty and myself and others who are a bit younger have that to look forward to. It should not have to fall upon family to provide wher the government have failed. No permission or agreement is required of a foreign country before the government pay it's pensioners. The UK is a member of the OEDC ( The Organisation forEconomic Co-operation and Development ) and their goal continues to be to build a stronger, cleaner, fairer world. Of the 34 countries involved the UK is the only one that penalises some of it's pensioners in this way and we are taliking about 4% worldwide. You know, my brother was killed in Malaya fighting one of the UK's small wars and I wonder what he would think if he were alive today ! The politicians have a lot to answer for !
morlege
Saturday, September 24, 2011 at 03:33 AMFurther to what has been said. As a pensioner now living in Canada and also frozen, My generation were on rationing after the war and throughout our working life we dutifully paid all of our taxes and our mandatory National Insurance payments. Also through this period we paid back the leaselend loans to Canada and the USA which were not cleared until 2006. This debt no longer exists. In addition most of the pensioners affected are ex servicemen and women who have more than paid a price for freedom and that should inlude freedom from poverty. My brother died in Malaya at the age of 20. I wonder what he would think if he were still alive. I'm sure that he could have said something about the handsome pensions that the MP's have awarded thenselves.
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