Frozen Pensions for British Expats Likely to Stay

Frozen state pensions for British expats who live abroad in Australia, NZ, Canada and many other countries will likely continue for the near future after an exchange in the House of Commons. There was hope that the state pension would be linked to inflation for British expats who are staying in many Commonwealth countries after the Australian Minister met with Duncan Smith recently, but it seems their pension is likely to be continued to be paid out at a lower rate after the British Minister for Pensions, Steve Webb shot down an MP in the Commons.

Stephen Phillips, the Conservative MP for Sleaford & North Hykeham, referred the minister for pensions, Steve Webb, to research which suggests that Britain’s frozen pensions policy deters emigration and, consequently, ignores a chance to reduce the UK’s health and age care bills.

The research, which came from from the Runnymede Trust think tank, claims that by maintaining the long-standing policy, Britain is “shooting itself in the foot”.

Britain has about a million expat pensioners. Those who live in EU countries and most other non-Commonwealth nations receive the same annual pension increases as their contemporaries in the UK. But the approximately half a million who live in most Commonwealth nations have not had their pensions increased since they began drawing them overseas. In some cases that was 20 or more years ago.

Mr Webb however told Parliament that it would cost £655 million a year to grant parity to the frozen pensioners. He also questioned the assumption that increased emigration would lead to speedy and significant health care and associated savings.

“I have… read that report, which I think is flawed on a number of grounds,” he said. “To give an example, it assumes that if we uprate pensions, far more people will emigrate, and it counts savings from health and social care that might not materialise for 15 to 20 years while counting the costs up front.”

“Our colleagues in the Treasury are not so far seeking policies with large costs for the current comprehensive spending review period that will give savings in 2030,” he added.

Frozen Pensions for British Expats in Australia

This will become a blow for Australia as the government spends around $A110 million a year (£72 million) providing means-tested assistance to Britons who have become needy as a result of their frozen pensions, and continually presses Britain to rescind the policy.

Ms Macklin’s office has since advised that Australian officials are liaising with their British counterparts about the commencement of these talks. Mr Duncan Smith’s office, however, has yet to comment.

Frozen Pensions for Commonwealth Nations

Mr Webb’s comments in Parliament provoked anger among members of anti-frozen pensions campaign group the International Consortium of British Pensioners. They believe that the £655 million cited by Mr Webb is a fraction of the sum frozen pensioners currently save Britain by relieving the Treasury of their health and age care costs. -from the Telegraph

Frozen Pensions for British Expats Likely to Stay by

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2 thoughts on “Frozen Pensions for British Expats Likely to Stay

  1. Andrew Leak

    I live in the Philippines and have not yet started drawing my UK State pension (I am fully paid up and did not opt out and I would like legally to avoid the UK taxes; I do not live there now)

    1. Richard Malpass Post author

      Hi Andrew,

      Luckily the Philippines has a Double Taxation Agreement with the UK which means that your state pension will not be frozen. It will increase in line with inflation. However, if you have a private pension, you would still be paying a 55% tax upon death and up to 50% income tax.

      Best regards,

      Richard

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