The Department for Work and Pensions has responded to questions about the controversial State Pension policy
The Department for Work and Pensions has issued a new update as it faces pressure over its state pension rules. A particular element of policy that has infuriated campaigners has been brought into focus after a query raised by an MP.
In a fresh response this week, the DWP has been compelled to justify its stance. The query emerged when Sorcha Eastwood, an Alliance MP for Lagan Valley, asked the department what evaluation “it has made of the equity of applying different State Pension uprating rules to pensioners based on country of residence for identical levels of National Insurance contributions.”
The issue has prompted MPs and campaigners to consistently demand changes to the law. The All-Party Parliamentary Group (APPG) on Frozen British Pensions has said on its website that 450,000 British pensioners, representing 3.5% of all State Pension recipients and half of those living overseas, are presently negatively impacted by the Government’s ‘frozen’ pensions policy.
They argued that this means instead of the annual increase received by UK pensioners, their pension remains fixed at the amount initially received for the remainder of their life abroad. In reality, this means their state pension diminishes in real terms year-on-year.
Their website said: “To give an example, a pensioner aged 90 who has lived in a frozen country for all of their retirement would now still get a state pension of just £64.70 per week. If they had lived in the UK, they would currently receive £156.20.
“As a further example, a pensioner aged 72 who became pensionable in a frozen country in 2016 would receive a state pension of £119.30 per week. This is in stark contrast to the £203.85 they would be receiving in the UK under the new state pension.”
The APPG on Frozen British Pensions, which fought for years over the issue until it was disbanded just before Sir Keir Starmer came to power, said it considered the policy to be “unjust”. At the start of this month, Standard Life published fresh analysis of the issue.
It stated that a retiree whose State Pension was frozen at the 2021/22 rate would now receive more than £3,200 a year, less than someone receiving annual increases. State Pension payments are frozen in countries including Australia, Canada and New Zealand.
Retirees living in these countries will not receive future annual increases to their UK State Pension. The APPG states more than 90% of the ‘frozen’ pensioners live in Commonwealth countries, many in Australia, Canada, South Africa and New Zealand, but also India, Pakistan, Bangladesh, many Caribbean islands and all African countries.
The International Consortium of British Pensioners said in a paper outlining its opposition to the policy: “No pension scheme should penalise some of its beneficiaries because of where they live, especially when the number of years of contributions to the scheme directly determines the amount of pension they’ll receive. Consequently, over 550,000 pensioners have made 1st class contributions to a 2nd class pension; that’s a social injustice and it’s morally wrong!
“The reason given by the British Government for continuing this unfair policy is that it up-rates pensions to overseas pensioners only when there is a legal requirement to do so, as with those living in the EEA, or when there is a reciprocal agreement in place with a particular country. It continues to say it has no plans to expand the reciprocal agreements with more countries. How can that be? How can a Government that stresses the need for fairness for all, and that expresses its concern for the wellbeing and dignity of the elderly, penalise over 550,000 of its pensioners just because of where they choose to live in retirement?”
DWP statement on state pension uprating rules
In response to these growing concerns, the Government has this week released a fresh statement on the matter – and it is unlikely to satisfy those opposed to the existing rules. In a written answer to the Alliance MP’s question, Torsten Bell, Parliamentary Secretary (HM Treasury), said: “UK State Pensions are payable worldwide, without regard to nationality, and are only uprated abroad where there is a legal requirement to do so, for example in countries with which we have a reciprocal agreement that provides for uprating. There are no plans to change this policy.
“National Insurance contributions and credits determine whether, and at what level, a person is entitled to State Pension. They do not determine whether a State Pension paid overseas is uprated each year.
“Overseas uprating depends on the country in which the pensioner lives and whether the UK has a legal basis for uprating there. Uprating is based on levels of earnings growth and price inflation in the UK which has no direct relevance where the pensioner is resident overseas.
“This approach has been supported by successive governments, over many years with priority given to those living in the UK when drawing up expenditure plans for pensioner benefits, and this policy has been upheld in courts.
“Information about the impact on State Pensions of moving abroad is available on Gov.uk.” You can see the gov.uk web page here.
What happens to my state pension if I move abroad?
Emma Furlonger of Standard Life said this week: “You can still claim your UK State Pension abroad as long as you’ve paid enough National Insurance contributions to qualify and notify the Department for Work and Pensions of your move.
“However, where you choose to live can make a significant difference. In some countries your State Pension will be frozen, meaning it stays at the rate you first receive there and won’t benefit from future annual increases, including those awarded under the triple lock.
“This applies in popular destinations such as Australia, Canada and New Zealand. By contrast, people living in the EU and countries such as the United States currently continue to receive annual increases.
“It’s therefore important to check the rules for your chosen destination before making the move. Over a long retirement, missing annual increases could make a meaningful difference to your income.”
