Recent changes to the UK pension system, a lowering of the LTA limit and the potential scrapping of expats’ tax allowance (outside of the EU) have rightly got many UK expats concerned that the government’s austerity measures are having an unfair impact on their finances.
There’s one more longstanding issue, however, that’s been inflicted on the most financially vulnerable expats and despite prolific campaigning there seems to be no end in sight – frozen pensions. Under the current rules, British expats living outside of the EU and in Commonwealth nations do not receive inflationary increases to their state-pension.
For those who have been abroad for decades this results in worryingly small sums each week. A recent article highlighted the plight of Anne Puckridge, a 90 year old former intelligence officer in the Women’s Royal, who, having moved to Canada to be near her family some 14 years ago, only receives £75.50 per week. If she had remained in the UK she would be entitled to £110.15. Mrs Puckridge will now be forced to return to the UK as she’ unable to pay her way in Canada.
To put this in perspective, there are some £560,000 UK expats worldwide who’ve had their pensions frozen. Whilst not all will be facing such dire circumstances as Mrs Puckridge, how can the UK government stand by and allow its oldest and most vulnerable citizens to suffer?
Politicians have been non-committal with their responses to pleas for reform. Recently, Sir Roger Gale, the Conservative MP for Thanet North and a steadfast supporter of expats who have had their pensions frozen, recently met David Cameron, saying the PM was "not unsympathetic" but that no change was imminent. Back in 2007, Steve Webb, now pensions minister, gave his support to those suffering under current frozen pension rules, saying: “The practice of freezing these pensions is wholly unfair, discriminatory and irrational.”
This support, however, was short-lived, and today his office supports the current legislation. Despite support from both Sir Roger and his compatriot Sir Peter Bottomley (MP for Worthing West), there appears to be little movement for the case against frozen pensions. Although media attention around stories like Mrs Puckridge’s is substantial, for now it appears anyone thinking of retiring abroad should prepare themselves for an “unfair, discriminatory and irrational” treatment of their state pension.