Looks at the policy of not uprating the UK State Pension in some overseas countries

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The UK State Pension is payable overseas but not uprated annually unless the pensioner is resident in a country with which there is a reciprocal social security agreement requiring uprating or (while the UK was a member of the EU) in an EEA country. The UK-EU Withdrawal Agreement and separation agreements with EEA/EFTA countries, provide for this to continue for those within scope (see Gov.UK, Benefits and pensions for UK nationals living in the EEA or Switzerland).

For those not in scope, who move to an EEA country from 1 January 2021, the arrangements will depend on the outcome of negotiations on the future relationship (although in relation to Ireland, existing reciprocal social security rights continue to be protected, upholding the principles of equal treatment and reciprocity established by the Common Travel area in 1922 (SI 2019/622)). For more detail, see Library Briefing Paper Brexit and State Pensions (May 2020).

UK pensioners in other countries – most notably Australia, Canada, New Zealand and South Africa – have their pension frozen i.e. paid at the same rate as it was when they first became entitled, or the date they left the UK if they were already pensioners then.

The policy of not awarding increases in some countries overseas has been followed by successive governments and continued with the introduction of the new State Pension in April 2016. Essentially, the reason is cost and the desire to focus constrained resources on pensioners in the UK (PQ 131353, 12 March 2018).  In April 2019, Pensions Minister, Guy Opperman, confirmed that the Government had no plans to change the policy:

The policy on the up-rating of UK State Pensions paid to recipients living outside the UK is clear and is a long-standing one of successive Governments since WW2. The annual index-linked increases are paid to UK State Pension recipients where there is a legal requirement to do so. For example, where UK State Pension recipients are living within the European Economic Area, Switzerland and Gibraltar or in countries where there is a reciprocal agreement in place that provides for the uprating of the UK State Pension. The Government has no plans to change this policy. (PQ239930, 10 April 2019).

The All Party Parliamentary Group (APPG) on Frozen British Pensions has put the case for “partial uprating” – which means currently frozen pensions would be uprated going forward, from their current rate (HL Deb 24 February 2016 c251).

The issue has been raised in Parliament on numerous occasions. In some years, an early day motion has been tabled praying against the relevant statutory instrument, which has led to a debate on the issue. The policy has also been subject to legal challenge. The case was heard by the European Court of Human Rights’ Grand Chamber in September 2009 and the Court’s judgment of March 2010 was in the UK Government’s favour.

  • Commons Research Briefing SN01457
  • Authors: Djuna Thurley, Roderick McInnes
  • Topics: Pensions

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