All workers and their employers pay National Insurance (NI) contributions into the British pension fund. The Department of Works and Pensions (DWP) pays pensions out of this fund. Pensions are increased annually to account for inflation - in UK language the is referred to as uprating. In a fair system, pensions would be determined by the amount of pension bought by the contributions. It is not. About a half of British pensioners living abroad receive the same pension benefits as pensioners living in the UK. The other half do not: rather they are denied uprating from the date of their first overseas pension payment.
Does this sound innocuous to you? Consider the 100 year-old lady living in Vancouver, whose pension has been frozen at the level of 1960, and is now £6 per week - just enough to buy 3 loaves of bread.
Mostly, it is residents of the former Commonwealth countries that are negatively affected. For this reason, I have entitled this article Commonwealth Fraud.
This informational video from the International Consortium of British Pensioners illustrates the issue well.
There are 430,000 British pensioners living in countries where there pensions are frozen at the level of their first pension - mostly former Commonwealth countries. The other half of pensioners living abroad receive the same pension benefits as pensioners living in the UK. Most of the defrauded expatriates are living in Australia, Canada and New Zealand with their families. Most of those receiving uprated pensions are living in Europe and the United States.
Residents of smaller countries are also treated unevenly. For example: UK pensioners living in Jamaica receive an average of £82.57 a week, while those in Trinidad and Tobago receive an average of only £44.02.
Is there any rational for this? It seems that there is only history, pressure and stubbornness! Pressure from the European Unions and the United States ensured that UK pensioners living there would receive fair treatment. Reciprocal agreements ensure such treatment in many smaller countries. The governments of Canada and Australia have frequently asked for such agreements and been stubbornly denied. The excuse that the monies are needed to support impoverished pensioners at home holds no water: rather the DWP is piling up significant surpluses year after year and far in excess of the tiny amount that would be needed to unfreeze the pensions in the "frozen" countries.
The injustice is long-standing. Here is a quote from a 1995 speech in the House of Lords, by Mr Winston Churchill (grandson of Sir Winston Churchill):
"The selection of countries where British pensioners have their pensions frozen is, to say the least, bizarre indeed, insane would not be too strong a word. Those who choose to retire to one of the old dominions which played such a key role in the very victory which, a fortnight today, the Government will be rightly spending significant sums to celebrate have their pensions frozen.
However, those who retire to the land of our former enemies Germany or Italy naturally get their pension payments and all upratings paid in full.I invite Ministers to ponder that point as we approach the 50th anniversary of VE day. Where is the justice? Why is the full pension payable to someone who retires to Detroit, but not to someone who lives just across the water in Ontario, Canada? Why should those who retire to Jamaica or Barbados receive a full pension, but not those who retire to Trinidad or Tobago? Why should those who retire to Iceland receive the full pension, but not those who retire to India or Pakistan? Why are pensions frozen for the 14 remaining British pensioners in the Falkland Islands, when billions of pounds of taxpayers' money were spent reclaiming those islands from Argentina?
Where is the justice; where is the logic? I should be grateful if my hon. Friend the Minister, when replying to the debate, would, for once, deal with the question of justice. Where is the justice in these arrangements? I am bound to say that successive Ministers have ducked that question because they have never dared defend such discriminatory, unfair arrangements on the ground of justice. It is about time that they did so and I look forward to hearing what my hon. Friend the Minister has to say." Source:Hansard
See also Government sanctioned thievery.
The issue of unfair treatment of pensioners is championed by the Canadian Alliance of British Pensioners, and the British Australian Pensioners Association. The two have now joined to form the International Consortium of British Pensioners. Please visit their websites to see more detailed information and facts.
They are strongly supported by the Canadian and Australian governments, whose efforts to reach fair agreements with the UK have been so far unsuccessful. They have the strong support of community organisations in the UK, such as Age Concern.
The organisations have been successful in gaining support from MPs in the opposition parties, but strangely this support seems to fade when these same MPs are elected to govern. Most upsetting are the actions of the current Minister responsible for pensions, Steve Webb: while in opposition he supported pension uprating for the frozen countries, but now in charge of the pension portfolio he claims not to be able to find the funds. The national newspaper, The Telegraph, printed this open letter to Steve Webb.
The Consortium coninues to fight for fair and honorable treatment for all pensioners.