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The UK government has come under criticism over its policy regarding expat pensions. Currently individuals who have paid national insurance contributions over the course of their working lives but emigrated to over 120 countries including Canada, New Zealand and Australia will have their pensions frozen rather than rise along with their onshore contemporaries.
This situation exists in countries with whom the United Kingdom does not have reciprocal agreements in place. It is estimated that 565 000 expats are affected by the anomaly.
Countries such as Australia have been lobbying the UK government to change the rules as currently they are being left footing the bill when British expat income falls short.
“They are clear that the current pensions minister supported their cause in opposition but in government has refused to act,” says Gregg McClymont, shadow minister for pensions. “The minister should clarify his position.”
“The International Consortium of British Pensioners insists that unfreezing the affected pensions would save taxpayers money in the long run but further evidence is needed to establish whether this is in fact the case.”
“The UK state pension is payable worldwide, but is only uprated abroad where we have a legal requirement or reciprocal agreement,” said Iain Duncan Smith, the secretary for state for pensions.
“This has always been the case and people who are considering emigrating abroad should always consider the impact the move could have on their future state pension entitlement.”