Page last updated at 14:47 GMT, Tuesday, 16 March 2010

UK expats lose pension freeze appeal

Pensioners
About half of UK pensioners overseas are caught by the pensions freeze

More than half a million UK pensioners living overseas will continue to have their pensions frozen after a European court decision.

Pensioners who moved to countries such as Australia and Canada only receive the level of pension paid at retirement - which might be only £6 per week.

The European Court of Human Rights rejected an appeal from a group of pensioners by an 11 to 6 majority.

The group wanted to receive increases in line with inflation.

The decision has saved at least £500m a year for the government, which said that its first responsibility was with pensioners living in the UK.

The expatriate pensioners say they have been fighting "tooth and nail" against the UK government in an eight-year court battle.

Pensioners who have moved abroad want their UK state pensions to rise in line with inflation each year.

Inflation-proofing only applies to UK pensioners who live in the European Economic Area or in 15 other countries, but not in some Commonwealth states.

Entitlement

John Markham, a pensioner living in Canada, said: "There is an image of people living well in the sunshine - but there are plenty of cases of real hardship."

The applicants did not contribute to the UK economy, in particular, they paid no UK tax to offset the cost of any increase in the pension
European Court of Human Rights

He said the decision was the end of the legal road, but they wanted to take the case to the "court of public opinion".

He told the BBC News website that they would take 48 hours to consider the decision.

The campaigners argue that they paid into the pensions system when they were working and are entitled to the same benefits as those who remained in the UK.

For the oldest overseas pensioners, who retired in the early 1970s, the pension can be as low as £6 a week. Those who retired in the early 1980s are left on about £30 a week, and those who retired in the early 1990s get about £50 a week.

The current basic state pension is £95.25 a week.

'First priority'

There are more than a million UK pensioners living overseas - with about half of them affected by the pensions freeze.

Annette Carson
South Africa resident Annette Carson was among those who started the case

If pensioners have moved to countries with a reciprocal arrangement - such as in the European Union or the United States - then they receive pension increases.

But if pensioners have emigrated to countries without any such agreement - such as Australia, Canada and South Africa - their pensions have been frozen at the level of when they moved overseas.

The Department for Work and Pensions welcomed the ruling and said the department's first responsibility was to support pensioners in the UK.

"We note that the court has found in favour of the government. We do not therefore plan to make any changes to the current arrangements, which allow for the exportability and up rating of UK state pensions," a department spokesman said.

"We will, nonetheless, study the terms of the judgment carefully to ensure that we continue to comply with our obligations under the terms of the European Convention on Human Rights."

The department has said that pensioners who chose to move to a country without a reciprocal pensions arrangement would have been aware of what it would mean for their state pension.

Link

The case has seen a series of courts reject the arguments of pensioners including Annette Carson, who moved to South Africa in 1990.

After emigrating, she continued to make full contributions to her UK state pension and, on retirement in 2000, began to receive pension payments. But since then, the UK authorities have frozen the level of payments at £67.50 a week.

Judges at the European Court of Human Rights were the latest to declare that National Insurance contributions did not have an "exclusive link" to retirement pensions.

"As non-residents, the applicants did not contribute to the UK economy, in particular, they paid no UK tax to offset the cost of any increase in the pension," a statement from the court said.

The court said that it was hard to draw any genuine comparison with the position of pensioners living elsewhere.

But Michelle Mitchell, of Age Concern and Help the Aged, said: "This ruling is bad news for half a million pensioners whose only fault is to retire to the 'wrong' country in the international 'postcode lottery' of pensions up-rating."


We asked for your views on this story. You can find a selection of your comments below, read expats' stories here or join the debate here.

This is totally unfair. It in effect tells pensioners where they may live. Retired people should have the right to live wherever they choose.
Art Hampton, USA

It's probably the right decision. People who have chosen to retire outside of the safety net of the UK or those countries with reciprocal agreements have taken a risk not only with potential currency fluctuations but have accepted a stagnant income in the face of decades of inflation. I feel sorry for those who face genuine hardship but the UK has enough to worry about without throwing £2.5 billion at citizens who abandoned her shores and no longer make any contribution to her economy.
Mark, Bath, UK

Again we the pensioners have been duped - no increase in pension and no health assistance. The big question could be if all the pensioners decided to return to the UK what would the cost be to the government? Not £500 million per year but possibly five times that including health costs.
John Leighton, Braslia DF Brazil

I have an English born great aunt who moved to South Africa as a child. She lived there until retirement age, paying absolutely nothing into the UK economy whatsoever for more than 50 years. After reaching retirement age she relocated back to the UK. Now she receives a full state pension, housing and council tax benefits and all other assistance as provided by the government. Although she is family, how can it be right that those who spent their working lives paying into and benefitting the tax system and the wider economy be entitled to less of a pension than someone who only came back to this country to claim what they may be entitled to, but are certainly not deserving of? The money that people like my great aunt claim should be reallocated to those who have paid their dues, regardless of where they decide to spend their retirement.
Anon, Nottingham, UK

"The campaigners argue that they paid into the pensions system when they were working" and what they paid in was immediately paid out again! When are people going to stop trotting this non-argument out? NI is not a bank or an investment fund. What I pay NOW is used to fund pensions NOW. When I retire, I will be funded, in turn, by those paying in at the time. As far as I know, the only relevance that my payments have is in the proportion of the pension I will eventually be entitled to receive.
Mike, Wisbech, UK

The European ruling is a start, maybe now we can move to a position where if you leave this country, you thereby give up your right to any state pension whatsoever! When the original calculations were done it was assumed that the pension money would be spent in this country and benefit everyone.
James Strachan, Peterhead, UK

I have been paying voluntary NI contributions for some nine years while living in Japan, so that I can receive a full state pension when I retire - irrespective of where I may be living. The argument that we expats do not deserve index-linked pensions because we do not pay UK tax is flawed. We do not send our children to state schools in the UK, benefit from UK law and order, drive on UK roads, claim any form of UK benefit etc. I want to also point out that unlike our pensions, our voluntary NI contributions DO increase with inflation.
David James, Kyoto, Japan



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