The great pensions divide...
How expats receive up to FOUR TIMES less, despite paying in the same
BRITISH expatriates whose state pension is frozen at the rate they started to draw the money are being urged to have it uprated every time they make a return visit to the UK.
More than a million pensioners have retired abroad but more than half have seen their incomes shrink over time because the level of pension is frozen on the date they take their first payment.
While those moving to European countries or the US enjoy the same annual cost of living increases as pensioners over here, people heading to popular retirement destinations such as Australia, Canada, South Africa and New Zealand see the real value of their pensions dwindle each year.
Sheila Telford, chair of the action group International Consortium of British Pensioners, says: ‘People work all their lives and make their contributions so they should be entitled to see their pensions increase after they retire either back to the country they came from or to live near relatives who have emigrated.’
As a protest against the rules, she suggests expats apply to have their pension uprated whenever they return to the UK for a holiday. She says: ‘I live in Canada and although the uprating only covers the time you are in the UK, I do it when I come home just for the nuisance value.’
However, the pension amount paid will revert to the frozen value when they go back home.
About 550,000 British expatriate pensioners are scattered among 120 countries – the majority living in Commonwealth countries where the UK state pension is not increased annually.
European Union obligations mean the Government must uprate pensions for expatriates living in European area countries. For those in other countries, such as the US, there are longstanding bilateral agreements where the UK has a legal arrangement to increase payments because that country does the equivalent for its expatriates.
A Department for Work and Pensions spokesman says: ‘This has always been the case and people who are considering emigrating abroad should always consider the impact the move could have on their future state pension entitlement.’
The cost of boosting these pensions – estimated at £590million a year – means successive governments have resisted demands for them to be brought in line with those at home.
Ninety-year-old Elsie Owens from Denton, Manchester, retired from the Greater Manchester Police in 1986 aged 62. Elsie, who lives with her son Philip, 65, receives her full entitlement of £113.10 a week – and this has risen every year since she started drawing it 28 years ago.
Not so for her older sister Enid Brown, 94, who emigrated 4,000 miles away to Calgary, Canada, in 1982. Her pension is frozen at just £29.60 a week – a quarter of the value of her sister’s payment.
Many expatriates, like Enid, are unaware that when they leave the UK they will receive less than others, even though they made equivalent National Insurance contributions. She told The Mail on Sunday: ‘The Government is mean in its treatment of pensioners and I was never told that my pension would be frozen. If I had retired just a few miles over the border to the US I would have had my full state pension for the past 30 years.
‘I can’t live without dipping into my savings and I spend my time watching what food I buy. There are only ever the basics, never any luxuries. I have contributed to Britain financially my whole life including during the war and I don’t think it’s fair we get so little in return.’
Elsie agrees: ‘If you go to Spain your pension follows you, but if you retire somewhere like Canada in the Commonwealth it doesn’t. I thought the point of Commonwealth countries was that they are meant to help each other.’
To find out about uprating your state pension – or that of a friend or relative – during a visit to the UK call The Pensions Service on 0191 218 7777.
PAY GAP: Elsie Owens, right, and sister Enid Brown, pictured in 1941 as bridesmaids, have hugely different pensions as Enid’s was frozen after she emigrated to Canada, while Elsie’s has risen with inflation