State Pension after Brexit and frozen pensioners

January 24, 2020 Ros Altmann Comments 5 comments

Good news for British expats in Europe as Withdrawal Agreement guarantees their State Pensions will not be frozen.
Government should now reassure these pensioners that, whatever happens after 2020, they have lifelong state pension uprating.
However this is only for expats already in Europe by year-end.
Government must warn people of the risk that future retirees who move to Spain, France or other European countries after 2020 may have their pension frozen.

This note deals with the question of State Pension payments after Brexit for people who already retired to France, Spain or another European country – and those who may want to do so in future. The Withdrawal Agreement negotiated by the Government and now approved by Parliament, means Brexit happens on 31st January. We then enter a so-called Implementation Period which effectively allows for ‘standstill’ arrangements up to December 2020, during which we try to negotiate a future relationship on an enormous range of issues. Many of these impinge importantly on people’s lives. Government must explain to the public what is going on.

Current expat pensioners in Europe are guaranteed lifelong State Pension uprating: The Government’s Withdrawal Agreement has negotiated reciprocal rights for State Pensions to increase in line with those paid in the UK. A few months ago, the Department for Work and Pensions warned that expat British pensioners in other European countries might lose annual increases to their state pensions if Britain left the EU without a deal. It committed to paying the annual increases for three years after a no-deal Brexit but gave no guarantees after that. These people’s fears of having their pensions frozen can now be allayed.

Government must quickly reassure them to put their minds at rest: I hope the Government will quickly make sure these people know the good news that those already living in Europe can relax, as they will receive increases on their state pensions for life.

This protection only applies to expats living in Europe before end-2020: This protection of State Pension uprating will also apply during the transition period too. So anyone who moves to Spain, France or another European country before the end of 2020 will also be covered by the same guarantee. That will be good news for those people too, but it is vital to explain clearly what is agreed.

The Withdrawal Agreement does not cover those who retire to Europe after 2020: The Government says it is aiming to agree reciprocal arrangements with the EU for the next phase of our departure. But if it fails to do so by year-end, and the Implementation Period is not extended, future expats could see their State Pensions frozen.

They may join the ranks of over half a million British frozen pensioners around the world: More than 500,000 British pensioners live in one of the 120 Countries which do not have a formal reciprocal agreement and their UK state pensions have been frozen. Many of these live in former Commonwealth nations such as Australia, Canada, South Africa or New Zealand and even the Falkland Islands. British pensioners living there receive the same State Pension as the day they left the UK. Those retiring to other countries, including the US, Jamaica and the Philippines are uprated, and the 650,000 or so British expats living in European countries also receive annual State Pension increases. A major campaign on behalf of the frozen pensioners, who have lost all the Court challenges on this issue, has tried for many years to achieve uprating, but successive Governments have consistently refused.

Urgent need to tell people: I am delighted that there is now protection for the 650,000 or so worried British expats living in European countries. I also hope that the next phase of Brexit will agree reciprocity by end 2020. But, in order to give people a fair chance to protect themselves, the Government must explain the risk of frozen State Pensions for future expats.

5 thoughts on “State Pension after Brexit and frozen pensioners”

Whilst this is good news for the British expat pensioners living in Europe, this is cold comfort to the 520,000 UK pensioners living in “frozen” countries. Over 95% of these “frozen” pensioners live in the Commonwealth countries of Australia, Canada, New Zealand and South Africa.
The Government has given two reasons for not uprating ‘frozen’ pensions:
1. In these austere times, the country cannot afford it and
2. Bilateral agreements between the UK and each “frozen” country would need to be negotiated, and the Government has no plans to enter into new agreements because they are too expensive.

Affordability
According to the Government’s own figures, the cost to uprate “frozen” pensions is £600 million a year, which sounds like a huge cost until you look at the cash pile the Government is sitting on. According to the accounts for the financial year ended 31st March 2019, the excess sitting in the National Insurance Fund (NIF) – which is used with the (almost) sole purpose of paying the UK State Pension – was £27.34 billion. By law, the NIF must maintain a balance equal to 1/6th of the annual payments from the NIF, which, in this case was £17.42 billion, leaving a “real” excess of £9.92 billion. The excess grew by £2.62 billion in the past year alone. The Government Actuary’s Department has forecast that this “real” excess will grow to over £41 billion by 2023-24. The country can clearly afford to uprate “frozen” pensions, with no increase in taxation or National Insurance Rates, and they have been able to for at least four years now, since 2015-16.

Bilateral Agreements
As far back as the Third Report of the Social Security Committee of the Department of Social Security (DSS) in 1996/97, the Government has conceded that bilateral agreements are not necessary in order to uprate pensions. The Committee said: “They [bilateral agreements] are not strictly necessary for that purpose as uprating can be achieved through UK domestic legislation”. In the European Court of Human Rights in November 2008 – Carson and Others v. The United Kingdom – 42184/05 [2008] ECHR 1194, paragraph 46 is very clear: “The existence of a bilateral agreement is not necessary for the uprate to be paid, as the question is regulated purely by domestic legislation”. In 2013, Freedom of Information Request No. 595 was filed, requesting “‘confirmation that reciprocal agreements are not necessary to uprate pensions in countries where this is no such agreement”. The response from the DWP was “Bilateral agreements are not necessary in order for pensions paid outside Great Britain and the EU to be uprated”.

As far back as November 2000, the then Minister of State, Mr. Jeff Rooker, stated in the House of Commons: “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 it 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…”.
In the past 18 months, the UK has concluded five new bilateral agreements (with Ireland, Iceland, Lichtenstein, Norway and Switzerland), and in the coming months, they will negotiate new bilateral agreements with all of the EU countries as part of implementing the new Withdrawal Agreement.
Even though bilateral agreements are not necessary, it would seem that this is the only route that the Government is prepared to take. Therefore the question is: “When will it be our turn? We have been waiting for half a century – how much longer must we wait?”.

Nigel Nelson
Prior Chair, International Consortium of British Pensioners (ICBP)
http://www.pensionjustice.org

The primary reasons why the UK government should uprate the frozen pensions are outlined below. 95% of those who suffer this unfairness and indignity being retired in some of the 48 of the 53 Commonwealth nations, for it will be with these nations and post Brexit that the UK will probably be seeking improved trading relations.
Listed below are the main reasons for the International Consortium’s of British Pensioners’ campaign to force the UK to resolve this issue;-
1 Unfairness
Firstly Peter Lilley, a UK MP, who was previously the Secretary of State for Work and Pensions, responded to a question of mine to him at a Sydney business breakfast. He agreed the issue of freezing our pensions was unfair, but indicated, in his opinion, the offending regulation would not be changed.
According to Master of the Rolls, Lord Bingham’s treatise on the Rule of Law 2006;
• “Ministers and public officers must exercise the powers conferred on them fairly, for the purpose of which these powers were conferred.”
• “Adjudicative procedures provided by the State should be fair”.
• Prime Minister Theresa May MP, planned to promote at CHOGM 2018 “Fairness in democracy as a fundamental freedom and good governance across the Commonwealth.”
Irrespective of these statements the UK continues to unfairly freeze the pensions of just 4% of its pensioners, 95% of whom live in Commonwealth nations!
2. Equality
Also in his treatise on the Rule of Law, Lord Bingham states, “the law of the land should apply equally to all.” “Equality before the law is the corner-stone of the constitution”. Freezing the pensions is contrary to the UK’s Equality Act
3. Cost
Cost, we’ve, been advised on several occasions, is the reason for freezing our pensions. At present it’s argued it would cost £600million/annum to uprate all frozen pensions. However, having regards to the fact the National Insurance fund is presently in credit by almost £30Billion, more than £10billion above the Government Actuary’s prudential balance of 2 month’s pension payments, surely this claimed £600milion could be found from that significant balance. The Government’s non-affordability argument is therefore questionable; even more so, because this NI fund credit balance is forecast to soar to £61.7bilion by March 2024, that is over £40Billion above the prudential balance in 2024.
Furthermore, in 2013, the UK’s Ministry of Justice lost its appeal in a Supreme Court case, O’Brien v the Ministry of Justice, UKSC 6, because of the UK’s claimed discrimination against a part-time Court Recorder whose UK pension was denied because of its cost. In this Supreme Court appeal case, the Court deemed; “budgetary considerations [costs] cannot be used to justify discrimination.”
4. Discrimination
The UK pension regulations fail to comply with the UK Parliament’s Code of Conduct, item 5 of which states “Members have a duty to uphold the laws including the general law against discrimination. It must be seen as discrimination when a 90year old pensioner resident in Australia after 25 years since 1994, is still, after those 25 years provided a full pension of just £56.10/week whilst a newly arrived pensioner of pension age is provided £129.20/week.
Moreover, the UK’s pension policy is contrary to the Commonwealth Charter which states; “The Commonwealth is implacably opposed to all forms of discrimination”, notwithstanding which, the UK’s PM, Theresa May MP, at the time replied to my letter, commenting on this issue, “the Charter is not a human rights instrument but sets out ambitions for the Commonwealth group of nations”!!! Why have those ambitions not been implemented?
5. Surely at CHOGM2020 this issue must be included on the agenda for debate, so all the Commonwealth Heads of Government might provide their views on this matter, for it is contrary to all the UK’s core values of fairness and equality of which British people and its Government boast but in regards to this situation they dismiss them and should consequently be ashamed.

There is no need to comment on the remarks made by Mr Nelson and Mr. Tilley….they say it all quite eloquently and accurately.
I can only add to them by asking about the morality of it.
If something is wrong, it is wrong and should be corrected now.

The real problem is that there are no votes in it for MPs. They can be dishonest and dishonorable, steal money from British pensioners who have paid the same as everyone else but who cares? We all live thousands of miles away and most of us don’t have a vote. We contributed to the wealth and prosperity of the UK, some of us risked our lives in war but who cares? We paid our fair share in taxes and NI but the government and MPs. It is cheating and there is no other word for it and all MPs who oppose us having the pension we deserve are CHEATS. There is no other word for them.