Author Archives: Colin Bloodworth

Triple lock restored but half a million miss out

Work and Pensions Secretary Therese Coffey has confirmed that the government will remain committed to the state pension triple lock for the rest of this parliament, following the temporary move to a ‘double lock’ in 2022 because of pandemic distortions. 

This means that in April 2023 British state pensioners will once again receive an uplift at the highest of the rise in earnings, price inflation or 2.5%. Due to the huge increase in the cost of living this year, and depending on what this amounts to by September, the increase in April 2023 could be 8% or higher.

It may appear generous but pensioners will still have to cope with inflationary pressures for a whole year while waiting for the increase to take effect. And let’s not forget that the increase they are receiving this year will be less than originally promised by the government in their election manifesto. 

Even with the Triple Lock, the fact is that the British state pension is one of the lowest relative to average earnings among the developed countries constituting the OECD.

There is another fallacy that is overlooked even by the unions. Namely the concept of cost of living increases calculated in terms of percentages. For a low earner or pensioner with an annual income of £10,000 an increase of 8% would amount to £800 whereas a person with an income of £100,000 would receive an increase of £8,000! The tax brackets may reduce the disparity a little but it should be obvious that the system simply results in an ever-widening gap in monetary terms between the rich and the poor.

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Let’s welcome the end of the 15 year rule

Legislation is in the pipeline to restore voting rights to around a million British nationals who have been disenfranchised by living overseas for over 15 years. See James Churchill’s article of 9th February in LDV for more aspects on the subject.

Reaction to previous articles has brought to light a number of misconceptions about this significant group, many of whom are potential Lib Dem voters and even members.

As representatives of Lib Dems Overseas we would like to allay any concerns or disinformation by addressing some of the most frequent points that have been raised in the past.

Why should Brits abroad get to vote when they don’t pay tax?

Most in fact pay tax in their host countries but Brits overseas are also liable to a range of taxes in the UK, such as income from UK rentals, pensions and Inheritance Tax which applies wherever they live in the world if they are deemed (as the vast majority are) UK domiciled.

Why don’t they just vote in their host countries?

Most Brits are transient in their host countries and in any event would not be allowed to vote unless they adopted citizenship, which in turn would normally entail cutting ties with the UK and potentially losing their passports.

Why would they be interested in voting if they no longer live in the UK?

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End of 15-year rule – a big opportunity for all Lib Dems

In the fine print of the recent budget was an announcement that UK citizens living abroad for more than 15 years were to get the right once again to vote in general elections. Eligible voters would register at the location where they lived prior to moving abroad (although we would like to see the establishment of overseas constituencies).

Legislation should be laid before Parliament later this year to bring about the reform.

It is estimated 5 million British citizens live overseas, and that 3 million have lived overseas for over 15 years.

Posted in Op-eds | Tagged | 31 Comments

Lib Dems Overseas takes action to end seventy years of injustice for 500,000 pensioners

Imagine you took out a retirement plan in your twenties with a private insurance company in order to qualify for an inflation-protected pension. You then discover in horror on retirement, after paying your contributions in full, that if you have moved overseas the pension provider refuses to uprate your pension each year unless you have moved to a ‘qualifying’ country.
Could that really happen?

Very unlikely in the private sector, but this is the reality for over half a million UK state pensioners, including some 100,000 war veterans. A recent survey showed that 50% of ‘frozen’ pensioners are receiving £65 a week or less, compared to the current basic pension of £134.25 a week.

What determines whether your pension will be uprated or not? It comes down to whether the country concerned has a ‘reciprocal agreement’ with the UK, an excuse which is illogical and unfair.
Qualifying countries include the USA, Europe (at the moment) and most British Overseas Territories. ‘Frozen’ countries include Australia, Canada, South Africa and most of Asia. To illustrate the absurdity of the policy, pensioners in the US Virgin Islands are uprated annually whilst those in the British Virgin Islands are ‘frozen’.

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Pensioners, You never had it so good…

…or so some people in this government want you to think

Everyone needs to ensure they get a good pension at the end of the day. So join Lib Dems Overseas Fringe Event: Frozen Pensions to Lost Pensions at the autumn conference 1pm  on Sunday 27 September to update yourselves on the politics of pensions and campaign to safeguard your future!

For decades the UK state pension lagged seriously behind the growth in average earnings. In 2011 the coalition government introduced a formula to protect pensions against the vagaries of inflation. It introduced a mechanism to guaranteeing that the state pension would rise every year by the highest of the following:

–  The rise in average earnings

–  The rise in the Consumer Price Index

–   Or 2.5%

It was called the Triple Lock and was hailed with great fanfare.

But no-one foresaw the coronavirus and the need to spend billions of pounds to shore up the economy and protect jobs.  Where would money to pay for it come from? One soft target identified is – you guessed it – the Triple Lock. The rationale is that earnings and prices this year could fall, yet pensioners would still get the 2.5%. Then, the following year pensions could surge in line with fast-rising earnings.

But those who think that our pensioners are spoilt are probably unaware of the fact that in 2019 the OECD provided data showing that the UK state pension was the worst in the developed world, paying only 29% of average earnings. By comparison, the Netherlands led the table at 100%. Mexico was closest to the UK at 29.6% while the average across the OECD was 62.9%.

What about occupational pensions?

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End of Triple Lock in sight? Why half a million pensioners are not concerned!

In 2011 the coalition government introduced a formula that would ensure that state pensions would henceforth be automatically protected against the vagaries of inflation. They introduced a so-called triple lock which would guarantee that the state pension would be increased every year by the highest of the following:

  • Average earnings
  • Price inflation as measured by the Consumer Price Index
  • 2.5%

Successive governments have honoured this formula (which produced an increase of 3.9% for pensioners in April this year) and the conservative manifesto in 2019 promised it would be maintained for the following five years.

But then came the coronavirus!

This has heaped a heavy financial toll …

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Pensioners and the impact of Covid-19

The global impact of Covid-19 is massive, and even more so for pensioners as the elderly have been singled out as the primary victims of the pandemic, with death rates rising dramatically with age.

There was some bright news for state pension holders in April as the ‘triple lock’ delivered them an increase of 3.9%. But this has been dampened by a ‘think tank’ recommendation for the scrapping of the ‘triple lock’ so that all generations can share in the cost of tackling the pandemic. What it did not acknowledge was that in relation to average wages the British state pension is among the lowest of the 20 developed countries in the OECD.

But there is a sizeable group of over half a million British pensioners living in certain countries abroad whose pensions have been frozen at the level of when they left the UK, whether it was last year, 20 or even 30 years ago. A huge injustice which is now magnified for those living under the threat of Covid-19 and many of whom do not even have access to free medical or care facilities.

I thank Ed Davey for raising this issue with Therese Coffey, Secretary of State for Work and Pensions, and asking for an immediate Covid-19 related intervention regarding the 500,000+ British citizens living overseas with frozen state pensions.

Posted in Op-eds | Tagged , and | 4 Comments
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