FROZEN PENSIONS FEAR
Campaigners warn: ‘UK will no longer be legally obliged to pay increases’ after Brexit
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 firstname.lastname@example.org or via the ICBP website. djones@ cbnews.es