Frozen British Pensions

Wednesday 28 March 2018 - Brexit update: “Nothing is agreed until everything is agreed”

I was recently speaking to my octogenarian friend James the other day (you may remember that I first introduced you to James in the "Ouch! How Brexit is hurting UK pensioners in Canada" blog and in the later blog "James and I go to London"), and I said to him what a quintessentially European phrase, “Nothing is agreed until everything is agreed” really is, although its origins seem to come from the World Trade Organisation (WTO) in 2005. What has this got to do with the UK State Pension which is what James and I always end up talking about? You see, he is a British military chap and he is usually found frothing at the mouth because he has found out that if he had stayed in the UK rather than retiring here to Canada he would be more than £31,000 better off in terms of his UK State Pension; using historic exchange rates, this converts to over $56,000 — not a trifling amount by any means. If James lived south of the Niagara Falls (in the US) he would have been getting the annual increases to his UK State Pension. Instead, he chose to live north of the Falls, here in Canada and he hasn’t been getting the annual increases, and his UK State Pension has been “frozen.” How unfair is that? James has been reading about Brexit and that got him thinking about UK pensioners living in Europe. There are 496,000 pensioners living in Europe who are in receipt of a UK State Pension: (Source: Dept. of Work and Pensions). Once the UK drops out of Europe, then, technically, the UK government no longer has a legal obligation to continue giving these pensioners the annual inflationary increase. This year the increase is 3%, so, for anyone getting their UK State Pension based on the pre-2016 Pensions Bill, this means an increase of just over £190 per year. Those who have retired after April 2016 will receive up to an estimated £260. These pensioners are not happy about the possibility of them losing the annual increase, and there are a number of European pension lobby groups who are petitioning the UK Parliament. The European Parliament and the UK Government have agreed that the UK government will continue to “export benefits” which includes the annual increase to the UK State Pension, and that has been drafted into the Withdrawal Bill which is currently before the UK Parliament. This is fine as long as the Withdrawal Bill is enacted. However, Brexit negotiations are currently getting bogged down with negotiating a trade agreement. If the negotiations are not all completed by March 27, 2019, then the UK could fall out of the EU, and the Withdrawal Bill could be in limbo. So, where would this leave the pensioners living in Europe who receive a UK State Pension? There are 540,000 pensioners living in 120 countries who do not receive the annual increase to their UK State Pension.: As you are probably aware, Canada is one of those 'frozen" countries and they have 144,000 “frozen” pensioners. The pension lobby groups that I represent are watching very carefully to see what Brexit delivers in terms of the annual UK State Pension increase. Technically, the pensioners living in Europe will be joining all the other “frozen” UK pensioners in the world, and the number would then swell to over one million unhappy pensioners — not a pleasant sight! The UK Government has said that as part of the Withdrawal Agreement, they will negotiate “bilateral agreements” with European countries such that the pensioners living in Europe will continue to receive their annual UK State Pension increase. What James and many others are asking is: “Why them, and not us?” If you think that you are going to be affected by the UK “frozen” pension policy, and would like to help us in our fight, please check out the Canadian Alliance of British Pensioners and they may be able to help you … Where do you stand on this? Nigel can be reached: E-mail: nigel AT britishpensions DOT COM
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Wednesday 28 March 2018 - James and I go to London

Nigel Nelson is a regular contributor to BritishExpats.com, and is a member of the non-profit Canadian Alliance of British Pensioners (CABP) - www.britishpensions.com, and a Director of the (also) non-profit International Consortium of British Pensioners (ICBP) - www.pensionjustice.com. Here’s his latest thoughts on Brexit and pensions in Canada. In my previous blog, I introduced you to my friend James (real person, name changed). James is an octogenarian who emigrated from the UK many years ago, and retired in Ontario in 1998. He is what is known as a “frozen” pensioner. Now, I know he lives in a cold part of Canada, but that is not why he is “frozen”! No, James is one of 144,000 UK pensioners living in Canada who do not receive an annual increase to their UK state pension — whereas pensioners living in the UK, the European Union, and several disparate countries around the world do receive the annual increase. This is known as the UK “frozen pension” policy. He still cannot understand why, if you live south of the Niagara Falls (in the US) then you get the annual increase, but if you live 500 yards north of the Falls (in Canada) then you don’t. When I showed him a “Pension Erosion” chart that I designed, then he looked up on the chart where I had marked it in blue the year in which he retired, and then realized that he had received £25,000 less than his peers in the UK … even though he has made the same National Insurance Contributions as them, and had earned a “full” UK State Pension. So, James packed his bags, said goodbye to his wife and set off for the UK — and I said goodbye to my wife and went with him. Somebody had to carry his bags! In the space of eight days, we spoke with 24 Parliamentarians (Members of Parliament and Peers), the UK media, and several other pension organisations. We showed everybody the Pension Erosion chart, and there came a new realization of just how badly UK pensioners living abroad in countries like Australia and Canada are being treated by the UK government. For example, for those UK pensioners living in Canada who are 85 or over, the accumulated “Pension Erosion” amounts to £669 million. For those UK pensioners living beneath the poverty line, the Canadian government subsidizes them, which comes out of Canadian taxpayers’ pockets, rather than the UK government’s. How can that be right, or fair? What we learned from our trip to London is that the main issue challenging UK Members of Parliament is Brexit. Nobody knows what is going to happen with respect to the 488,700 UK pensioners living in the European Union (EU). It is not clear whether these pensioners will continue to receive the annual increase to their UK State Pension once the Brexit negotiations have been completed, since the UK government only increases UK State Pensions annually where, “they are legally obliged to", Post-Brexit, If the UK is neither part of the EU or the European Economic Area (EEA), then the UK government is no longer legally obliged to annually increase the UK State Pension for UK pensioners living in the EU. The Telegraph reported in May 2016 that over a 20-year-period, UK pensioners living in the EU would be, “£50,000 poorer.” Many of the UK pensioners living in the EU fear that they will be a “pawn” in the Brexit negotiations, and their annual UK State Pension increases will be a “bargaining chip.” If this is the case — and their UK State Pension is no longer increased each year — then, for many of them, they will have no option but to sell up and return home to the UK. If all UK pensioners living in the EU were to return home to the UK, then the additional cost to the NHS has been estimated to be £2 billion per year. In talking to one MP, we found out that the rural areas may offer the cheapest housing but these houses are in remote locations, far away from medical facilities. NHS hospitals, which are already stretched, will become even more so due to inadequate staffing levels. Every day seems to bring yet another story of how the UK NHS system is one step closer to breaking point. Pensioners tend to be the greatest users of medical resources, so, if they were to return (from the EU) in significant numbers, they would stretch the NHS to beyond breaking point. James and I came back from London with new vigour to try and help the UK pensioners living in the EU, by setting up a new petition. We wanted to let as many people as possible know that the International Consortium of British Pensioners have developed their own petition. This petition is designed mostly for the nearly half a million UK pensioners living in the EU — but also applies to the 144,000 UK pensioners living in Canada who already have their UK state pension “frozen” — who may lose the annual indexation to their UK State Pension as part of the Brexit negotiations. We also ask anyone reading this blog to write to Theresa May, letting her know how you feel about "frozen" pensions, We would also like to encourage readers to join in the battle and become members of the Canadian Alliance of British Pensioners, or, if you live in the antipodes, then join British Pensions in Australia..
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Tuesday 27 March 2018 - Ouch! How Brexit is hurting UK pensioners in Canada

I was talking with my good friend James (real person, but name changed) the other day and he wasn’t very happy. But first let me tell you a little bit about James. He has spent his whole retirement living in Ontario, Canada – he is 83 and first started drawing his UK state pension in 1998. At that time he was paid £64.60 a week which in those days meant he was getting about $150 a week; this was when gas cost 52 cents/litre, and a loaf of bread cost just $1.30. Today, because of the UK’s Frozen Pension policy, James is still getting £64.60 a week, which immediately after the Brexit vote converted to $110/week ($40/week less than he was getting in 1998) – the British pound instantly fell 18% against the Canadian Dollar. Meanwhile the cost of gas has gone up to 94 cents/litre ($1.15/litre in Western Canada), and a loaf of bread is now nearly $3. How can anybody be expected to live on just over 100 bucks a week? James’ British State Pension has fallen in real terms because the UK Government steadfastly refuses to annually uprate pensions for UK pensioners living in Commonwealth countries like Canada and Australia. The rate of inflation in Canada has increased and “frozen” pensioners continue to lose pace with the cost of living. How can that be right? You can imagine what James said to me the other week when I told him that if he had retired to the southern side of Niagara Falls, in the USA, rather than the northern side in Ontario, or even if he had stayed in the UK, then he would have received about an extra $56,650 CAD in pension money since he retired. What he said to me cannot be shown! James is not the only UK pensioner who is feeling the pinch. The CBC Vancouver radio station recently contacted the Canadian Alliance of British Pensioners (CABP) as part of its research on the immediate effect of Brexit on UK pensioners living in Canada. \ The UK State Pension is paid every four weeks and many pensioners cannot afford to pick and choose when they convert their sterling into Canadian dollars. They need the money as soon as possible because for some it is their only source of income. This means that they are hostages to fortune with regard to exchange rates – they have to take what is available on the day. This has hit UK Pensioners living in Canada very hard and it’s also a similar story in Australia. Brexit will have a significant impact on the “frozen” pensions issue. The UK is only legally obliged to pay the annual increase to pensioners who live in the European Economic Area (EEA), Gibraltar or Switzerland or countries that have a social security agreement with the UK that allows for cost of living increases to the State Pension. The EEA includes all EU countries plus three other countries - Iceland, Liechtenstein and Norway. There are over 400,000 UK Pensioners living in the EU and over half of them live in EU countries that had pre-existing (i.e. prior to them joining the EU) social security agreements with the UK, which may now come back into force post Brexit. However, the other half live in EU countries where, like Canada, there have never been social security agreements that facilitate annual uprating of the UK state pension. If the UK is able to negotiate to join the EEA, like Norway - without being part of the EU, then one presumes annual uprating will then be restored to all EEA/EU countries. However, one of the tenets of the EEA is free movement of people and so it is not clear how the UK would be able to join EEA as opposition to free movement of people is thought to be the main reason for the “Leave” vote of Brexit. Regardless the UK will not be able to ignore the new “frozen” pensioners in the EU. There are over 144,000 UK Pensioners living in Canada who are hoping that whatever the UK Government does for the new “frozen” pensioners in the EU then they will do the same for “frozen” pensioners living everywhere in the world – there can be no just or legal basis for treating the EU “frozen” pensioners any differently from the other “frozen” pensioners around the world! It is time to bring this unfair and immoral practice to an end, and then maybe my friend James can smile again. Watch this space (as well as the CABP website and Facebook page) for further updates, both on Brexit and on how my friend James is managing to make ends meet. Nigel is a member of the not for profit CABP - www.britishpensions.com,
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Tuesday 27 March 2018 - Quirks of the UK State Pension affecting British Pensioners Living Abroad

Have you ever worked in the UK? Did you make National Insurance contributions (NICs) when you worked? Depending on the number of years of NICs you have to your credit you might qualify for a British state pension. However, if you qualify for a UK State Pension, as long as you live in Canada, you will not receive the annual inflationary increase as given to pensioners in the UK, EU and an obscure list of countries. This is known as the British “frozen pensions” policy. The Canadian Association of British Pensioners (CABP) was established in 1991 to help British pensioners living in Canada navigate the UK state pension system by providing information with respect to eligibility for a British state pension; keeping current with the successive changes which have been made to the UK state pensions system and lobbying the UK government for parity with all British pensioners living overseas. We can answer your questions about the UK pension system. CABP is a registered non-profit organisation and all of the directors are volunteers, as are most of the people who work out of the office in Toronto. Anyone who has worked in the UK and has paid National Insurance Contributions may well qualify for a UK state pension. Those people in Canada look to organizations like CABP, which has the experience and understanding of the UK pension system, for advice. There are over 5,000 members in Canada who currently get this support. According to the 2011 Canadian National Household Survey, there were 125,000 British immigrants over the age of 65 living in Ontario and another 65,000 in the 55-64 age category. In Toronto alone, there are 43,000 and 24,000 respectively. Many of these immigrants will qualify for a British state pension, but may not know that; and they’re probably unaware that, once they start to receive a UK State Pension, they will never receive any of the annual increases enjoyed by their peers in the UK, even though they will probably have paid the same level of National Insurance Contributions. Successive UK governments for over 70 years have followed this “frozen pensions” policy. The policy is based on out-dated logic and the UK government has now conceded that the only impediment to eliminating the “frozen pension” policy is cost, accompanied by the ‘political will’ to do so. There are over half a million “frozen” UK pensioners living abroad - 90% of these “frozen” pensioners live in Commonwealth countries such as Australia (45%) and Canada (28%). CABP provides support to UK pensioners in Canada and they work tirelessly in trying to abolish this unfair and immoral policy. For example if you live on the American side of Niagara Falls you would receive the annual increase; if you live on the Canadian side of the Falls you wouldn’t receive the increase. If you had retired in 1980 with a full UK State pension it was just £27.15 per week – slightly over 50 bucks in today’s money – could you live on that? There will be cases where members, who do not have the full number of years of National Insurance contributions, are living on less. A UK pensioner retiring on a full State Pension in 1980 will have been underpaid by £80,000 up to the end of April 2016. Today’s UK state pension, at £119 per week, is 440% more than it was in 1980! CABP believes that this is unfair, discriminatory, and immoral, and they have been campaigning since 1991 to get this policy changed. In comparison, the CPP payment is payable to Canadians globally and is adjusted annually wherever the Canadian pensioner chooses to live. Sadly, some of these pensioners even have to go back “home” to the UK since they can no longer live on their “frozen pension”. This is causing them considerable angst – leaving behind their loved ones, having to make travel arrangements, and finding accommodation when they get back. For example, last year alone, there were 2,000 UK pensioners who returned back to the UK, and, for many of them, it will be because they could no longer afford to live in their country of choice, based on the state pension they were receiving. Any returning pensioner to the UK has their pension uplifted to the current rate – the same as all other pensioners living in the UK. They also qualify for other social welfare benefits. Currently, the UK Treasury saves over £4,300 per year for each pensioner emigrating, so, for returning pensioners, it adds to UK Treasury costs. Given these numbers, you would think that the UK Government would be encouraging pensioners to leave rather than putting barriers in their way. The good news is that there is a glimmer of light at the end of the tunnel. A proposal, with respect to amending the “frozen pension” policy has been submitted to the Cabinet Office in the UK Parliament in London. The proposal is currently under consideration, but is my no means a ‘done deal’ and so we must keep up the campaign. If you would like to find out more about your British Pension rights and how you will be affected by a “frozen pension”, or, you would like more general information, you can check out the CABP at www.britishpensions.com. CABP is based in Toronto and can provide a wealth of current and accurate information with respect to British pensions. Contact information is on the website.
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There are 550,000 UK Pensioners living in 120 countries (47 of which are Commonwealth countries) who do not receive the annual increase to their UK State Pension, therefore they have a "frozen" UK State Pension.. There are a number of lobby groups, working together, who are petitioning the UK Government so that all UK Pensioners get the same increase every year regardless of which country they have chosen to live in.

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