CampaignsPensions & BenefitsOverseas PensionsPension freezing “a moral, not financial issue” Pension freezing “a moral, not financial issue”
27/12/2006
Over half a million British pensioners are currently having their pensions docked - some by more than £55 a week – because they are now living overseas in Commonwealth countries.
Almost half of these are living in Australia, and The British Australian Pensioner Association Inc. says that the decision to unfreeze the pensions is not a financial issue but a moral one.
Interestingly, any MPs now living overseas do not have their official pensions frozen.
“We do not know why MPs and ministers of successive governments are so intransigent on this matter,” says James Nelson of the British Australian Pensioner Association. “The cost of unfreezing is not great, less than 1% of the annual cost of paying pensions.
“But this is not just a financial matter. The main argument for unfreezing is a moral issue, a question of justice. Pensioners in frozen countries have met the same conditions as those in unfrozen countries. Many of them, having emigrated midway through their working lives, do not qualify for a full pension (100%) and don't claim that they should.
“To see the injustice clearly you need to compare a pensioner living in Australia with one living in the USA and having precisely the same contribution history. The one in America has his pension indexed every year; the one in Australia has his pension frozen every year.
“Where is the justice in that?
“In addition, MPs and civil servants (and lots of others) get special protection of their official pension if they choose to retire to a frozen country, a privilege denied pensioners from the private sector.”
James Nelson has written a detailed account of the situation – viewable by clicking the link below.
Currently some 520,000 British pensioners have their pensions frozen. The Government’s decision to continue the freeze on rises in pensions for retired British citizens living in non-European countries also means that thousands more pensioners, who would go to live with family or friends abroad, are effectively being prevented from doing so.
This year’s “freeze” began with an annual Parliamentary procedure that began with the tabling of the draft 'Uprating Order' in the House of Commons on December 7th 2006.
The Uprating Order is the instrument that annually sets the universal increase in the basic state pension for the coming fiscal year. But just before payment is due to be made in the Spring, a regulation will quietly revoke the increase for those who move to any one of 149 selected countries—while keeping it intact for pensioners still resident in the UK or in some 35 other countries abroad.
This denies Britain’s 11 million resident state pensioners the ability to choose where to live in retirement without fear of incurring financial hardship. Sadly, many are forced to spend their old age alone in the UK, if their family is living in a country not included among those where annual upratings are applied. And of the Commonwealth’s 53 nations, 48 are adversely affected.
Countries in which state pensions are index linked include the United States of America, The Philippines, Israel, Turkey and those in The European Union, including new members.
An automatic pensions “freeze” despite support
The pension-freezing regulation passes every year because it is a “negative instrument” - one which carries on automatically unless a contrary motion is presented and passed. And, in spite of the support of 130 MPs for a universal pension uprating in 2006, no “negative instrument” has been successfully annulled since 1967.
Many of the 520,000 pensioners living overseas have their pensions frozen at less than £29 per week, in spite of the fact they worked all their lives in the UK and paid mandatory National Insurance premiums for many years. Some 98% of them live in Commonwealth countries, including 240,000 in Australia, 150,000 in Canada, 38,000 in South Africa and 37,000 in New Zealand.
Take the case of Geoff Dancer, who was born in the UK in 1921 and worked there for 44 years (including serving in the RAF from 1939 to 1948). When he retired in 1981 aged 60, he and his wife Doris, who also served in the RAF during WWII, emigrated to Canada to join their son and daughter.
On reaching the age of 65 in 1986, Mr Dancer qualified for a 100% state pension of £38.30 per week, the same amount he still receives today. Considering his wife’s pension as well, this couple has been denied almost £40,000 over the past 20 years – a figure that keeps rising with every passing year.
Challenging the law with the backing of the National Pensioners Convention
To bring an end to this situation, 13 “frozen” pensioners have filed a legal challenge against the UK Government in the European Court of Human Rights. The lawsuit is underwritten by a consortium of pensioner organisations based in Canada, Australia and South Africa and is backed by Britain's largest pensioner organisation, the National Pensioners Convention.
Tony Bockman (left), spokesman for the consortium, said: “Legal action should not be necessary. A stroke of a pen in the form of a simple modification to the existing regulation would instantly restore even-handedness and individual freedom to state pensioners at home and overseas – the very values that Tony Blair is actively promoting these days.”
Former pensions minister Stephen Timms confirmed that universal pension increases could be achieved by changing UK domestic legislation, when speaking in the House on March 10, 1999, echoing the 1997 report of the House of Commons Social Security Select Committee which concluded: “A simple change in British law could enable upratings to be paid in any or all overseas countries, provided the political will was there to do so.”
The £34 billion in pensioners’ money lying surplus in the National Insurance fund, identified by the Government Actuary’s Department (GAD) in January 2006, far exceeds the £400 million required to uprate the pensions of all contributors, wherever they live. The GAD forecasts the fund surplus will top £60.5 billion by 2011, almost 80 per cent of the anticipated NI expenditure for that year.
A win-win situation
“In freezing pensions, the Government may actually be fiscally irresponsible,” says Tony Bockman, pointing out that when seniors who wish to leave the UK are prevented by Government policy from doing so, heavy demands on the national exchequer are needlessly maintained.
The one million pensioners who have already left Britain save taxpayers an estimated £1.9 billion every year in health and care and other age-related costs.
“Others would leave if they could rely on uprated pensions, thus saving even more,” says Bockman. Then there are the extra costs associated with seniors whose frozen pensions force them to return to the UK for financial assistance with medicines and caregiving.
“It would be a win-win situation,” says Mr Bockman. “Modifying the legislation to allow universal state pension upratings to proceed would end the discrimination and would do much to restore Britain’s tattered image as the home of fair play. Further, it would not be as unaffordable for the British taxpayer as they may have been led to believe.”
For more information visit the website link below.
You can also sign an e-petition by clicking onto the third link.