FROZEN PENSIONS FEAR

Cam­paign­ers warn: ‘UK will no longer be legally obliged to pay in­creases’ af­ter Brexit

Costa Blanca News (North Edition) - - FRONT PAGE - By Dave Jones

CAM­PAIGN­ERS have raised the fear that the Bri­tish gov­ern­ment could freeze state pensions for ex­pats when the UK pulls out of the Euro­pean Union.

Nigel Nel­son, chair­man of the In­ter­na­tional Con­sor­tium of Bri­tish Pen­sion­ers (ICBP), told Costa Blanca News: “Although we can­not pre­dict what terms the UK gov­ern­ment might ne­go­ti­ate when it comes to UK state pensions cur­rently be­ing paid in Europe, it is pos­si­ble that Bri­tish pen­sion­ers liv­ing in the EU may no longer re­ceive the an­nual in­crease to their state pen­sion as the UK gov­ern­ment will no longer be legally obliged to pay it once the UK is no longer a mem­ber of the EU.”

The ICBP noted that frozen pensions hit Bri­tish na­tion­als who have cho­sen to re­tire to more than 120 coun­tries world­wide, many of which are in the Com­mon­wealth, in­clud­ing Aus­tralia, Canada, South Africa and New Zealand.

“The is­sue of frozen pensions is an ar­chaic UK gov­ern­ment pol­icy which con­tin­ues to pe­nalise more than half a mil­lion Bri­tish pen­sion­ers for spend­ing their re­tire­ment in the ‘wrong’ coun­try,” ac­cord­ing to the ICBP.

Th­ese ex­pats re­ceive no an­nual in­crease to their pen­sion, mean­ing they face a de­cline in their real-term in­come ev­ery year.

Cur­rently, any re­tiree mov­ing to a coun­try within the EEA has their state pen­sion up­rated as part of the gov­ern­ment’s ‘triple lock’.

How­ever, ac­cord­ing to the ICBP, ‘there’s a huge amount of uncertainty about whether this will con­tinue af­ter Brexit, with many pen­sion­ers liv­ing in Europe wor­ried about their fu­tures’.

The con­sor­tium is now try­ing to raise aware­ness about the prospect of the UK gov­ern­ment cre­at­ing frozen pensions in Europe, ‘as Bri­tain po­ten­tially with­draws from EU so­cial se­cu­rity pro­vi­sions’.

“This in­cludes 108,010 in Spain,” they noted.

David Bur­rage, co- founder of the for­mer Bri­tish Ex­pats As­so­ci­a­tion on the Costa Blanca, stated: “I can con­firm that, with­out ex­cep­tion, UK state old-age pen­sion­ers only ben­e­fit from the an­nual in­crease of their state pensions in line with pen­sion­ers res­i­dent in the UK be­cause of the UK’s mem­ber­ship of the EU.”

The cur­rent so­cial chap­ter reg­u­lat­ing this is the EU’s so­cial se­cu­rity co­or­di­nat­ing Reg­u­la­tion EC 883/2004, he stated.

“This has been a thorny is­sue for many years now be­cause UK state pen­sion­ers, even when mov­ing to Com­mon­wealth coun­tries, have their pensions frozen at the level of their date of de­par­ture,” ex­plained Mr Bur­rage.

“The most re­cent wran­gle was with Canada, who have been pick­ing up the bill by way of so­cial as­sis­tance.

“Even that is rarely avail­able else­where in the world. In­deed, there are only a hand­ful of coun­tries world­wide where the UK has a bi­lat­eral agree­ment, such as the USA, Ja­maica, Is­rael and the Philip­pines.”

Mr Bur­rage added: “Whilst there could be a num­ber of other ben­e­fits af­fected in the event of a cold Brexit, the main ben­e­fits are the state pen- sion, health­care and dis­abil­ity and re­lated ben­e­fits dis­abil­ity ben­e­fits, etc.”

A spokesman for the UK’s depart­ment for work and pensions replied to Costa Blanca News in re­sponse to our ques­tions about frozen pensions.

He stated: “The re­cip­ro­cal rights and en­ti­tle­ments that will ap­ply fol­low­ing the UK’s exit are sub­ject to the wider ne­go­ti­a­tion on the UK’s fu­ture re­la­tion­ship with the EU. “Th­ese ne­go­ti­a­tions have not yet be­gun and so it is not pos­si­ble to set out any po­si­tions in ad­vance.” Nigel Nel­son, chair­man of the ICBP, re­sponds on the is­sue of frozen pensions:

With Brexit so ill-de­fined at the mo­ment, what leads you to be­lieve that the UK gov­ern­ment will with­draw from EU so­cial se­cu­rity pro­vi­sions? Although we can’t know any­thing for cer­tain, the UK’s vote to leave the EU could po­ten­tially have a seis­mic im­pact on UK state pen­sion­ers re­sid­ing per­ma­nently in the EU. The UK state pen­sion used to be based pri­mar­ily on a per­son’s Na­tional In­sur­ance Con­tri­bu­tion record, how­ever, now, the NIC equiv­a­lent is con­sol­i­dated across all EU coun­tries. The an­nual in­crease is based on a dif­fer­ent set of rules al­to­gether and the UK gov­ern­ment only pays the an­nual in­crease where they are legally obliged to pay it. Cur­rently, an over­seas UK state pen­sioner only re­ceives the in­crease if they live in the Euro­pean Eco­nomic Area (the EU plus Nor­way, Ice­land and Licht­en­stein) plus a hand­ful of dis­parate coun­tries such as the USA and Ja­maica. This leaves about 544,000 Bri­tish pen­sion­ers around the world with ‘frozen’ pensions which cause sig­nif­i­cant hard­ship, loss of in­de­pen­dence and dis­tress.

As well as the is­sues re­lated to pensions freez­ing, cur­rent Bri­tish pen­sioner ex­pats are also sub­ject to the sec­ond is­sue of pen­sion­ers rights. Th­ese two is­sues are cir­cu­lat­ing around the EU via the Face­book group “Pro­tect Euro­pean Pensions”. One re­lates to pen­sion­ers rights, and the other to pen­sion freez­ing. Th­ese are in­ter­con­nected prob­lems, which can­not be dealt with by them­selves.

So, although we can­not pre­dict what terms the UK gov­ern­ment might ne­go­ti­ate when it comes to UK state pensions cur­rently be­ing paid in Europe, it is pos­si­ble that Bri­tish pen­sion­ers liv­ing in the EU may no longer re­ceive the an­nual in­crease to their state pen­sion as the UK gov­ern­ment will no longer be legally obliged to pay it once the UK is no longer a mem­ber of the EU. If this hap­pens, who would be af­fected?

Any UK state pen­sioner liv­ing in the EU may no longer re­ceive the an­nual in­crease to their state pen­sion. There are cur­rently 476,000 Bri­tish pen­sion­ers liv­ing in the EU – mainly in Ire­land, Spain, France, Ger­many, Cyprus and Por­tu­gal. Along with the im­pact of the de­clin­ing value of the pound, this will make life very tough, and for some un­sus­tain­able.

Freez­ing state pensions for those in EU coun­tries will fur­ther limit the abil­ity of Bri­tish peo­ple to re­tire abroad in the fu­ture. Even if tran­si­tional ar­range­ments are ne­go­ti­ated for those cur­rently res­i­dent in the EU, with­out new so­cial se­cu­rity agree­ments, fu­ture re­tirees will have no right to an up­rated pen­sion.

It is our goal to re­move the frozen pen­sion pol­icy once and for all, thereby help­ing all over­seas state pen­sion­ers. We en­cour­age ev­ery UK pen­sioner liv­ing in an EU coun­try to join us in this

bat­tle. For more in­for­ma­tion con­tact Nigel Nel­son at nigel@british­pen­sions.com or via the ICBP web­site. djones@ cb­news.es

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