‘Frozen’ pensions affect UK recipients living abroad

More than half a million people living overseas have “frozen” state pensions, according to government figures.

Around 510,000 recipients of the UK state pension living overseas do not benefit from state pension increases in the same way those living in the UK receive the “triple lock”, which increases the payments yearly by the highest of earnings growth, inflation or 2.5%.

Most of those included in the figures live in Australia, Canada and New Zealand.

The bill to thaw out these frozen pensions over the coming years would be an estimated £3 billion.

The Department for Work and Pensions (DWP), which released the figures, said that if the state pension in “frozen rate” countries were to be uprated, the estimated cost over the next five years would be £3bn.

Tom Selby, a senior analyst at AJ Bell, said calculations suggest that over the course of retirement this could have a huge impact, potentially costing more than £50,000 in state pension income.

He said: “For many this might be the difference between living comfortably and struggling to make ends meet.

“Unfortunately for those affected there is no sign of a reprieve, with successive governments rejecting calls to rethink the policy and preferring instead to focus resources on those who choose to remain in the UK.