The UK State Pension is paid to British nationals of retirement age who have contributed through their National Insurance for the required number of years. The state pension increases each year since the introduction of the ‘triple lock’ guarantee, in 2010.
But what happens to your pension if you decide to retire abroad?
Expat pensioners can claim their state pension abroad, as long as they have paid enough UK National Insurance.
However, there are currently over 500,000 expat pensioners living in Canada, New Zealand and Australia who have had their pensions frozen. In essence, this means they do not receive the annual increases others benefit from. It seems extremely unfair, doesn’t it? Why should where you live affect the amount of money you receive? And more importantly, what are the government doing about it?
Why are some expat pensions frozen?
All of the retired expats affected by frozen pensions have paid their National Insurance contributions just like everyone else. It is simply because of where they decided to expatriate to that has determined the amount they receive.
For some years, certain countries have had reciprocal arrangements to allow British expats residing in those countries to receive the current pension rate. Yet, in other countries including South Africa, Canada, New Zealand and Australia, this is not the case. Instead, those who moved to these countries receive the pension rate that was set at the time they left the UK.
Understandably, outraged expat retirees and other supporters have been campaigning for this unfair policy to be changed. Surely such inequality cannot continue in this day and age?
What does the future hold for frozen pensions?
Despite many failed campaigns and court cases, there has been growing support for those affected. Sir Roger Gale who is the chair of the committee on frozen pensions continues to speak up about this unjust situation. His belief is that every qualifying British pensioner deserves an uprated pension, regardless of where they have chosen to spend their retirement.
However, in a recent announcement from the Department for Work and Pensions, it has been revealed that the potential costs for unfreezing the pensions of those affected would amount to around £600 million a year.
In amongst all of this, is of course the future for those living in EU countries after Brexit. Will those expats end up suffering the same fate in a no deal scenario?