House of Commons Select Committee Report (1997)
Third Report (January 1997) of the House of Commons Social Security Committee
(Up-rating of State Retirement Pensions Payable to People Resident Abroad; HC Paper 143)
Proposal: “There should be a complete change of policy. We should revert to the system which all the
other equivalent countries who have similar schemes operate, that everyone is treated even-handedly.”
The Parliamentary Secretary of State formally undertook to look carefully at any proposals from this committee. Mr Heald studied the evidence
given … by expatriate organisations and stated: “what is being argued is a principle, it is one which they are not really prepared to consider compromise on; what is being said is that it is all or nothing, and from our point of view it cannot
be all, because of our financial position as a country and because of the history.
Given the perennial constraint on public expenditure, it is hard to identify a single compromise which would substantially meet the expatriate pensioners’ case
at a reasonable cost.”
Committee: “Surely no one would have deliberately designed a policy of paying pensions to people living abroad intending to end up in the position we are in today. We have essentially four groups of
overseas countries: The European Economic area where European law requires equal treatment with pensioners living in the UK; other countries where bilateral agreements have been made which provide for uprating; three old Commonwealth countries where bilateral
agreements were made before indexation was taken into account; and the rest of the world. While the governments of Australia and Canada have expressed their concerns over the lack of upratings for pensioners, the position of most British pensioners in those
countries (and in New Zealand) is protected by their social security systems and the bilateral agreements with the United Kingdom. It is impossible to discern any pattern behind the selection of countries with whom bilateral agreements have been made providing
for uprating. It would clearly be impractical to negotiate individual bilateral agreements with each of the countries in the world where people draw British state retirement pensions, and in any case unnecessary; a simple change in British law could enable
up-ratings to be paid in any and all overseas countries provided that the political will was there to do so. The allocation of scarce resources and the language of priorities are what politics and government are all about. It is not a question of first reaching
a moral judgement about the rights and wrongs of the expatriates’ case, and then deciding whether or not this country can afford to do anything about it. The decision about whether public expenditure on state retirement pensions should be increased in
future by paying uprating increases which are not required by law at the moment is a political question which includes, but is not distinct from, the moral question. Ultimately, it must be for the House to decide, and that is our concluding recommendation:
That there should be a free vote at prime time to allow Members to express their opinion on the principle of whether the Government should pay up-ratings to some or all of those pensioners living in countries where up-ratings are not paid at present.
Home Secretary, Jack Straw speaking at St Pauls Cathedral 2 Oct 2000
“A modern civil society is based on basic values of individual worth and equality
of opportunity for all …under the Human Rights Act everyone gets the same basic guarantees from our public services whoever we are and wherever we live.” “Courts do get strong powers to give legislation a meaning that fits with ECHR rights
wherever possible. And there is also the power to declare primary legislation incompatible with Convention rights.”
(“Human Rights and Personal Responsibility” with regard to the UK’s new Human Rights Act. (2 Oct 2000)
House of Commons (356 HC Official Report (6th Series) col 628)
13 Nov 2000
Minister of State, Mr Jeff Rooker: “I have already said I am not
prepared to defend the logic of the present situation. It is illogical. There is no consistent pattern. It does not matter whether a country is in the Commonwealth or outside it. We have arrangements with some Commonwealth countries and not with others. Indeed,
there are differences among Caribbean countries. This is an historical issue and the situation has existed for years. It would cost some £300 million to change the policy for all concerned.”
18 March 2004
Piara Khabra, MP for Southall: "There is definitely an anomaly in the law because some people are deprived of the right to uprate their pensions
while others are not. .... Many ethnic minority pensioners from India, Pakistan and other Commonwealth countries have lived in this country for 40-50 years. They are bitter about the current law which deprives them of the opportunity to uprate their pensions
while making it available to people in other countries."
Pensions Bill debate in Committee
18 March 2004
Steve Webb, MP:
“There are those who have argued that the issue is just making a noise for the rich few who can afford to live in sunny climes and that frankly they can look after themselves. Some of those people are well off – I cannot deny that - but some are
not. Some have ceased to be well off because they have been retired for a long time on frozen pensions .We are not talking of feathering the nest of the favoured few, but justice. It is said that they knew what they were doing. Probably some
did and some did not. I have met overseas pensioners who say that was far from clear at the time. The purpose of my new clause is the pensions of those who now live abroad should be annually uprated wherever they live.... We are now in
an extraordinary situation. British citizens who have paid their national insurance all their life, accrued entitlements to a state pension and committed the misdemeanour, as it were, of moving to Australia, New Zealand, or Canada instead of the
United States do not receive an uprated pension. Some of the principal agreements were signed in the 1950s when our culture as regards inflation was different. inflation was so low when the levels could be left for a few years before introducing an ad hoc
uprating. The British Government are free riding on the welfare states of countries that British citizens are moving to, we are asking other countries taxpayers to support our pensioners. The composition of the list of countries where one does have uprating
and the list of those where one does not is pretty odd, it hard to understand the logic, the entire pattern was arbitrary. There is no logic to it and it is hard to justify the situation we are in. The question relates to cost but sorting out unfairness does
have a cost - we are not feathering the nest of the favoured few, but justice. The question is moral rather than legal. The moral claim rests on the fact that we have a contributory pension system .We ask people to make contributions all their life
to accrue an entitlement. Why should that accrued entitlement vary according to where they choose to live? That doesn't sit well with the idea of a contributory system. Different Caribbean countries have different rules which seem crazy. The world has
moved on and peoples’ lives are more global; people are more likely to work overseas and their parents may want to go to live with them in retirement. Should we penalise those who retire overseas to be with their children or should we
say, “You've worked hard and paid hard. It's your pension, take it with our blessing?”
Comment by Lords Justice Rix, Justice Clarke of Stone-cum-Ebony and Justice Carnwarth
[Regulation 3, part of the “Persons Abroad Regulations”] – “its drafting is lamentable, it lacks clarity and it’s draconian.”
Dame Joan Bakewell 2005
“There is another view aside from the niceties of the law: That it is a matter of social justice. People paying insurance contributions in good faith,
expected to get the same pension as their contemporaries, wherever they chose to spend their retirement. Geography should have nothing to do with it. Why should the same consequences not follow if they retire to Canada, Australia, and South Africa, and yet
apply when they move to, for example, Bermuda, Israel, or Croatia. By what sense of social justice can such discrimination persist? The judgment was narrow enough this week, and the cases in favour of equal treatment are so persuasive that campaigners believe
it can’t be long before justice prevails”. (Dame Joan Bakewell following Carson v the UK Government - European Commission Human Rights Court 2005)
Shadow Secretary of State
for Work and Pensions
21 Feb 2008
Steve Webb: There is a genuine injustice in (selective pension freezing) which the Government has recognised … but has done nothing to address.
Keynote speech at the Labour Party Annual Conference 2008
Prime Minister, Gordon Brown: “We will be the rock of stability and fairness
upon which people stand. And why do we strive for fairness? We do it because it is in our DNA. We fight hard for fairness, we don’t give in, we never will. Fairness is treating others as we would be treated ourselves. In a
fair society the fact that older people are living longer should be a blessing for their families and not a burden. That’s fairness older people deserve and the fairness that every Labour party member will go out and fight
for. The fair society, fairness at home, fairness in the world. That’s the new settlement for new times. The mission of our times, the fair society, the cause that drives us!”
Nick Clegg MP
2 Dec 2009
I can assure you that Liberal Democrats firmly believe that pensioners should not be penalised for choosing to live abroad in retirement. The party’s
long-held commitment to rectify the situation remains steadfast.
1 December 2011
Phil Mawhinney: This London-based race
relations think tank issued a clarion call to the government to unfreeze overseas pensions. Their independent research within black and ethnic minority communities has shown that many of these people, after being encouraged to move to Britain to help rebuild
the country in the decades after the Second World War, are unable to return overseas in their retirement because their pensions will be frozen, and those who do relocate suffer a huge impact on their quality of life after contributing to the British economy
for decades. "lt is clearly unfair that the people who were encouraged to rebuild the UK after the Second World War by working for the NHS should risk losing their entitlements if they return to the Caribbean, or elsewhere. The current system of overseas pensions’
uprating is arbitrary with no logic behind a pension being uprated in Jamaica but not Trinidad. We therefore call on the Government to uphold fairness and uprate all overseas UK pensions."
of British Pensioners 2012
Sensitive to the political reality of the current severe economic stresses in the UK we have made suggestions for 'easing in' pension parity', if that is what must happen in order for global
uprating to be introduced. One example: In the first year, uprate the pensions of those who are 85 and older, as they are the ones most severely hurt by the freezing and many of them contributed mightily to the war effort; the next year, include those over
80; followed by 75+, then 70+, then 65+, and finally the remainder. If that is the only way forward, we are willing to eat the proverbial elephant one bite at a time until all of us receive our due.
Oxford Economics (OE) study regarding the frozen pension policy showed that every single British pensioner living overseas provides a net saving to the UK Treasury just short of £4000 a year,
for a current grand total of more than £2.2-billion in real savings annually. On top of the financial benefits to Britain, they also pointed out the political advantages inherent in removing pension freezing as a barrier to older people moving overseas:
pressure on Britain’s chronic shortage of hospital beds would be relieved, facilities for the elderly would be under less stress, and urgently-needed affordable housing units would become available.
A survey among pre-retirees in Britain showed that up to twenty-nine per cent of people in the 45-to-60 age bracket would consider emigrating to a ‘frozen’
country upon retirement providing the Basic State Pension was unfrozen. This translates to a potential additional 40,000-plus pensioners leaving Britain on top of these who leave each year regardless, meaning the government could keep an additional £100-million
in its pocket each and every year.
BPiA Newsletter 16: 2012
Open letter (excerpts) to Steve Webb, Pensions Minister
Many retired pensioners living
abroad, now have to seriously consider returning to the UK soon. Some have already made that decision and arrived back in Britain, including Annette Carson, the person who bravely took the Government to the ECHR. Many are unable to continue to exist on rapidly
depreciating frozen pension incomes. By returning to the UK they will once again reinstate their full legal entitlements to all those extras that the UK does not have to pay whilst they are domiciled overseas - hospital and medical services, free bus passes,
annual power subsidies and all the other social security benefits that will adversely affect a fragile UK economy. This reverse-migration, back to Britain, will eventually cost the UK far more than it would to index our pensions which the Government will then
have to index anyway! The bottom line is that the reversal of this policy would save the UK up to £30 billion over the next 15 years. This is borne out by calculations (as you Mr Webb are well aware) from an Oxford Economics survey supplied to H.M. Treasury
for their investigation. As this is so economically sound we can only conclude that although this is in the best interest of overseas pensioners and the UK alike, such a time scale seems to be quite beyond the scope of politicians’ thinking.
House of Lords debate
15 May 2012
BARONESS (FLOELLA) Benjamin raised concerns over disparity payments of black pensioners living overseas after asking
welfare reform minister Lord Freud about state pension payments to people resident in Jamaica and Trinidad and Tobago. The 19,000 people in Jamaica receiving the basic state pension get an average of £82.57 a week. The 1,590 people in Trinidad and Tobago
receiving the basic state pension get an average of only £44.02 a week. The disparity is caused by the policy of not uprating the state pension for inflation for recipients living in certain countries. Other Caribbean countries where the state pension
is not uprated include Grenada, St Lucia and Dominica.
“These figures clearly show how the policy of frozen pensions leads to arbitrary discrimination between pensioners depending on where they choose to live. Many people from the Caribbean have contributed
to the United Kingdom, including by serving in the armed forces and helping to rebuild the country after the Second World War,” said director of UK Parliamentary Affairs for the International Consortium of British Pensioners, John Markham. “They
paid their National Insurance contributions the same as pensioners residing in the UK and EU and it’s time the government rectified this unfair and immoral policy.”
After Baroness Benjamin asked him why the government uprates the state pension
for recipients in Jamaica, but not Trinidad and Tobago, Lord Freud answered, “Uprating of state pension only occurs where there is a bilateral social security convention in force with another country. The United Kingdom has operated
these conventions since the 1950's and 15 contain reciprocal arrangements allowing for the uprating of state pension, among them Jamaica.” The United Kingdom has not entered into a social security convention with Trinidad and Tobago. Since 1981, it has
been the policy of successive Governments not to enter into new reciprocal agreements with other countries covering social security benefits.
However, the UK entered into a reciprocal agreement with Barbados in 1992, 11 years after the cut-off date that Lord
Freud referred to.
BPiA Newsletter 17: 2012
Some Financial Facts about the “Frozen” Pension
1. There are about 560,000 frozen pensioners who
have retired abroad from the UK. 89% of these are retired in the 4 major Commonwealth nations.
2. Each pensioner living overseas saves the UK Government about £7000 a year in various health and social costs, which they would receive if still living
in Britain. That is a saving to the UK Government of over £3 Billion per annum.
3. The latest cost to the UK to index all frozen pensions is approximately £570 million annually.
4. The Government Actuary’s 2012/13 NI account
balance of £38.8 Billion is 2.6 times greater than the actuary’s required prudential balance to meet all future commitments. That is, there is a surplus of £20.7 billion in the NI Fund.
of Information Request 595/2013 - 7 February 2013
Freedom of Information request 595/2013: received 7 February 2013; published 7 March 2013.
Information request: Confirmation that reciprocal
agreements are not necessary to up-rate pensions in countries where there is no such agreement; i.e. confirm up-rating could be done by domestic legislation.
DWP response: Bilateral agreements are not necessary in order for pensions
paid outside Great Britain and the EU to be up-rated. There are currently no plans to change the existing longstanding policy of successive governments.
14 June 2013
“Webb urged to rethink policy on overseas pensions”: While giving evidence to a committee of MPs earlier this year, Steve Webb, the pensions minister, made the statement that “sympathy
butters no parsnips”. The unusual turn of phrase came as the minister told the committee he was not prepared to budge on the policy of freezing state pension payments to half a million pensioners living in 120 countries.
More than £120 billion was wasted by the Government last year alone – more than enough to wipe out the country’s debt [and that
is after paying frozen pensions].
The new Pensions Bill has been through its Committee stage. Gregg McClymont, a Labour MP, tabled an amendment to Clause
20 of the Bill, which is the clause which actually freezes expat pensions. The quality of the debate that ensued was shockingly poor, with many false statements and misconceptions aired. Sir Peter Bottomleyand Sir Roger Gale, longtime supporters of justice
for frozen pensioners, have espoused the cause anew and will be tabling another Amendment to the Bill calling for Clause 20 to be withdrawn in the near future.
The Telegraph. “Lifeline for expat
pensioners as MPs try to change law.” Richard Evans
4 Sept 2013
Sir Roger Gale and Sir Peter Bottomley, two
senior Conservative backbenchers, say they will table an amendment to the Pensions Bill currently going through Parliament in an attempt to ensure that all British pensioners living abroad receive index-linked increases in their state pension every year. Sir
Roger said: "Following a discussion with Peter Bottomley we are agreed that Peter will, with my support, table an amendment to the Pensions Bill. This may or may not prove effective but it is worth a shot. "It's surely time that our overseas pensioners were
given a fair deal on pension uprating in those countries where we do not have a reciprocal agreement."
Early Day Motion 474 in the House of Commons: That this House notes that Clause 20 of the Pensions Bill is intended to make lawful the continuation
of the unintended, purposeless discrimination against those British overseas pensioners, mostly in Commonwealth countries, who are denied the normal increases given to equivalent pensioners at home, in the EU and in most foreign countries; and therefore asks
the Government to withdraw Clause 20.