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.
Below is an email I received just this week from a pensioner living in Australia:
Dear Colin,
Our frozen pensions – mine has been frozen since 2001, when I left England to be nearer to my only (married) child, in Australia ; I have struggled financially since 2001 (albeit that I was a full time special needs teacher throughout my career in UK, and had 40 years contributions when I retired 2001). I am a British national, born UK , and maintain this nationality.
We need this money more than ever now, many of us being in our 70s and 80s, now struggling with the added cost of obtaining home help and other service. COV19 is just an added burden financially and emotionally for us, STILL STRUGGLING.. uk Government need to release our FULL PENSIONS immediately; please help us. Thank you.
There is more gloom for pensioners holding company pensions in the UK. Following the stock market’s crash the aggregate deficit of UK defined benefit schemes surged to a ‘staggering’ £135.9bn in March, up from £124.6bn at the end of February, according to latest Pension Protection Fund data. This implies that many schemes could go to the wall. The Pension Protection Fund provides compensation but it has limitations and risks coming under unsustainable pressure.
There is a further issue and that is since pensions were ‘liberated’ in 2015 many have now been spent or are being drawn down too quickly.
Not everyone looks forward to retirement. Many would welcome an opportunity to continue working in the same or a totally different capacity. But those who want to work often face age discrimination. So it is ironic that in the recent weeks thousands of retired medical workers have been called in to help the NHS in its unprecedented hour of need. Proof, perhaps, that enabling those who wish to work beyond retirement age can make an important contribution to the economy.
Many pensioners feel betrayed by successive governments. The party that can grapple with all the issues affecting pensioners, take a genuine interest in their welfare and be prepared to champion their cause stands to gain some 18 million supporters.
* Colin Bloodworth is a member of the Lib Dems Overseas Executive .
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4 Comments
Oh dear. Where to start.
“Following the stock market’s crash the aggregate deficit of UK defined benefit schemes surged to a ‘staggering’ £135.9bn in March, up from £124.6bn at the end of February, according to latest Pension Protection Fund data. This implies that many schemes could go to the wall. ”
the assets of UK defined befit schemes are around £1.5 trillion. a ( very small) increase in their deficit doesn’t imply many scheme could go to the wall. these are liabilities for many many years to come – in fact the biggest reason their deficit will increase is if long term interest rates stay low.
“There is a further issue and that is since pensions were ‘liberated’ in 2015 many have now been spent or are being drawn down too quickly.” yes people have sometimes made unwise decisions with their own money
“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.” Mainly because unlike many other countries we have a much greater relaince on employer provided pensions – which is why NI is a much lower level than many other countries social security charges .
The issue of UK pensioners living abroad (outside the EEA) having their pensions frozen is something of an anomaly. The reasons cited in this HofC library report https://commonslibrary.parliament.uk/research-briefings/sn01457/ are differential rates of inflation overseas and cost. Neither of these reasons appear to be based on solid grounds.
Pensioners living outside the EEA but in a country that has a reciprocal social security agreement requiring it do get the uprated pension. However, UK pensioners in other countries – most notably Australia, Canada, New Zealand, and South Africa have their pensions frozen. The obvious answer would be to update the reciprocal agreements with these countries where many Brits have retired while at the same time ensuring that Aussies, Kiwis, and South Africans retired in the UK ca receive commensurate pensions from their home countries.
Joe Bourke is perfectly correct. As far as the state pension is concerned, it is all about reciprocal agreements. I’m not sure if it’s the same for occupational pensions, although I had to make up my years of reckonable service as a teacher spent working abroad by paying extra monthly contributions for nearly twenty of the thirty four years spent in total at the chalk face.
My sister and brother in law emigrated around ten years ago to Namibia. Besides picking a country that was NOT a former British colony, they clearly didn’t do their homework before they took the plunge. I’m a bit confused about the use of the past participle “frozen” as I assumed that they were receiving their state pensions, but without the incremental increases applied since 2010. They did take it up with their former MP on one of their frequent visits to see their daughters and family; but to no avail.
All I would say is be careful if you abandon ship for better climes. It’s not always win, win! I wonder how many of those expats in Spain, Portugal and, to a lesser extent, in France, who voted for Brexit, are now wondering whether or not they cast their votes wisely, let alone whether they made the right decision regarding where to live out their retirement years.
The frozen pensions system applies to 4 British ‘Dominions’ at the time – Canada, Australia, New Zealand and South Africa. I rather suspect the thinking was that these countries would have a parallel system of social security which would compensate. Of course, as shown above, for many, the drawback is that the two social security systems don’t synchronise. The odd man out, where European style state social security never developed, was South Africa, where a British relative of ours married a Brit who had an RAF disability pension, which remained frozen for the remaining half century of his life. A year or two after his death, she re-assessed and returned, after 60 years, to the UK to live in charity-run sheltered accommodation. A major change to organise in one’s eighties, but all credit to her for doing so and fitting back in to life in her birth country.