The great pen­sions di­vide...

How ex­pats re­ceive up to FOUR TIMES less, de­spite pay­ing in the same

The Scottish Mail on Sunday - - Personal Finance - By Sally Hamil­ton

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

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.