By Harry Archer
When is the UK Government going to concede that the freezing of UK State Pensions paid
to those UK Citizens who have retired predominately in Commonwealth Countries is both
immoral, and discriminatory, and do the right thing – treat all UK Pensioners the same and
uprate all UK State Pensions regardless of where a person chooses to retire?
Half of all UK pensioners living overseas, (around 550,000), predominately those retired to
Commonwealth Countries have their UK State Pension payments frozen from the time they
left the UK, or when they first started to receive their UK State Pensions when abroad. The
freezing is imposed by the discriminative Section 20 of the UK Pensions Act.
There is no logic in the distinction between frozen and unfrozen countries. No such criterion
is applied to UK Pensioners’ resident in the UK, Europe, or the United States. Further, UK
Pensioners living in Commonwealth Countries are not a burden on the NHS or any other
social services. This saves to UK Government a fortune.
Why does this discrimination need to end?
The continued exclusion of overseas UK Pensioners from annual uprating of their UK State
Pensions means that over time that in real terms their incomes fall year on year. This leads
to hardship poverty and a loss of independence. Individuals are forced to choose between
being with family abroad or forced to return to the UK as they are unable to survive on their
frozen pension. A typical example given by the All Party Parliamentary Group (APPG) on
frozen pensions is of a pensioner who is 90 years old and only receives a pension of £43.60
per week. If that pensioner had lived in the UK during their retirement, then they would be
receiving £134.25 per week, or £175.20 per week if they were entitled to the new UK State
Pension.
UK State Pensions are not a benefit. All UK Pensioners who have paid the required National
Insurance (NI) contributions during their working life are entitled to a UK State Pension.
However, half of the UK Pensioners living abroad do not have their pension payment
indexed annually. UK Black, Asian, and Minority Ethnic (BAME) groups are disproportionally
affected, such as the Windrush people who were invited to the UK to help run the transport
system, postal services and hospitals as the UK was short of workers. They worked hard
and made a contribution to British life. Now retired many have returned home to live with
their families and unexpectedly found their UK State Pension frozen.
A common theme reported is that a UK Pensioner living in Canada has their UK State
Pension frozen, while someone living 500 metres away across the border in the US on the
other side of the Niagara Falls has their UK State Pension indexed. There can be no
justification for such discrimination. UK Pensioners in Australia and New Zealand suffer the
same discrimination as those in Canada.
There are many UK Pensioners suffering financial hardship. It is no good the UK
government stating that “they chose to go and live in a country where they knew their UK
State Pensions would not be indexed annually”. Choice does not come into it – are people
expected to live in loneliness away from their families because of this discrimination?
BREXIT and Global Britain
In spite of the UK Government policy of not entering into any new social security
agreements, a surprising and discriminatory move following BREXIT has been to commit to
the continued uprating of UK State Pension payments to UK Pensioners living in Europe.
Contrary to UK Government policy, a new agreement has been included within the BREXIT
Withdrawal Agreement to uprate the UK State Pensions for those living in the EU while
continuing to discriminate against those living in Commonwealth Countries. This is surprising
as the UK is looking more globally now and wants to conclude Trade Agreements with
Commonwealth Countries under a Global Britain Strategy. Thus, there is an opportunity to
include the mandatory uprating of UK State Pensions within these Trade Agreements if the
Commonwealth Countries can work together.
All-Party Parliamentary Group (APPG)
An inquiry undertaken by the UK All-Party Parliamentary Group (APPG) on frozen UK State
Pensions asserted 510,000 UK Pensioners are currently living on a frozen pension of which
the report stated, 150,000 live in Canada, and a further 230,000 are living in Australia. The
inquiry condemned the fact those retiring abroad would not see their UK State Pension sum
boosted each year. It called for a UK Government review of the current policy, and for action
to be taken on reciprocal social security agreements.
Commonwealth Position
The Commonwealth Charter states opposition to all forms of discrimination, whether rooted
in gender, race, colour, creed, political belief, or other grounds. The refusal by the UK
Government to uprate UK State pensions for those living in Commonwealth Countries is just
blatant discrimination. It should be noted that, such a policy of not uprating UK State Pension
payments is in contravention of one of the key principles of the Commonwealth Charter,
signed by Her Majesty the Queen in March 2013, which states: “We are implacably opposed
to all forms of discrimination”.
Recently Canada approached the UK to discuss an agreement on pensions, only for it to be
refused. The response from the UK Government was to say that it will continue to consider
the matter carefully, but it has since made clear that as things stand it plans to stick with the
present policy of no uprating.
UK Government Position
The UK Government policy is to only uprate UK State Pensions if the person lives in the
European Economic Area (EEA), Gibraltar, Switzerland and countries that have social
security agreements with the UK, so any UK pensioner living in a Commonwealth Country,
such as Canada, Australia and New Zealand is excluded from annual increases. However,
should they return to the UK then their pension would return to the current rate. This is a
wicked choice that is meted out to UK Pensioners, many who have contributed substantially
to the UK, for example, through being a member of the armed forces or in the National
Health Service (NHS).
The UK Government continues to try to justify this discrimination against UK Pensioners who
have retired to a Commonwealth Country, often to be with their family. The UK Government
continues to trot out the same excuses for not uprating UK State Pensions for those living
overseas.
Guy Opperman replied to a question (125256) in the House of Commons on behalf of the
Department for Works and Pension (DWP) in March 2018, in which he said:
The policy on uprating pensions abroad is a long-standing one of successive post-war
Governments. UK State Pensions are payable worldwide. However, they are up-rated
overseas only where there is a legal requirement to do so.
There are two main reasons for not paying annual up-ratings to non-residents. First, upratings are based on levels of earnings growth and price inflation in the UK which have no
direct relevance where the pensioner is resident overseas. Second, the cost of up-rating
state pensions overseas in countries where we do not currently up-rate would increase
immediately by over £0.5 billion per year if all pensions in payment were increased to current
UK levels.
Neither of the statements have any real truth. Firstly, many of the Commonwealth Countries
in question are all members of the Organisation for Economic Co-operation and
Development (OECD) where the level of inflation is controlled and similar to that of the UK.
Secondly, every UK State Pension payment is based on National Insurance (NI)
contributions. The NI fund is well in surplus and can afford to pay what pensioners have paid
for and should expect in retirement. A report in the same year showed that the NI fund had a
balance of £24.2 billion, which was above the estimated £16.8 billion minimum requirement.
Just imagine if a private pension company reduced its payments to pensioners depending on
where they chose to live. The company would be in Court and fined heavily.
Where to Next?
Everyone who have made the necessary NI contributions should be entitled to a full UK
State Pension regardless of where they decide to live in the world. Increasingly, many
people have built up their UK State Pension entitlement and then move abroad when they
retire only to find it frozen. There is no sense for such selective discrimination. The
Commonwealth Countries should act decisively together and to put pressure on the UK
government to index the UK State Pensions for UK Pensioners living in Commonwealth
Countries. It should form part of every Trade Agreement.
An opportunity to force discussions on the uprating of UK State Pensions is through the
Commonwealth Heads of Government Meeting (CHOGM) 2021, which will be attended by
HRH Prince Charles as HM Queens representative where the inequality of UK State
Pensions could be appended to the agenda for discussion. This would force the UK
Government in having to try to justify this discrimination, which exists, and it would be
unlikely to succeed, and it would be found to be in contravention of the Commonwealth
Charter.
