frozen pension

UK pensions secretary ‘cherry-picking’ facts on frozen pensions



Posted on: 28th May 2020

The frozen pension has been a popular topic for several years, impacting approximately half a million British ex-pats living abroad. This issue arises for those who retire to a country that does not have a reciprocal agreement with the UK. As a result, their state mention is not uprated in line with those in the UK. Payments are “frozen” at the sum they first received when they retired.

Nigel Nelson has accused the under-secretary to the Department of Work and Pensions (DWP) of cherry-picking facts in support of the government’s stance on the topic. He claims that in a recent response to MP Ronnie Cowan, who said that the state pension is an entitlement as opposed to a benefit, Guy Opperman replied that it is “technically and legally” a benefit.

But according to the activist, this simply isn’t true.

Citing former pensions minister Steve Webb, Nelson wrote in a letter to Opperman that the state pension is indeed a right and not just a benefit that workers receive upon retirement.

Nelson wrote: “Just because a pensioner chooses to live outside the UK is no reason to renege on the payment of a full pension.”

He claimed that the government’s freezing of pensions to retirees overseas is “robbery”.

A minimal income

Nelson said: “There are nearly half a million UK pensioners who are living overseas in near poverty. The vast majority live in the four Commonwealth countries of Australia, Canada, New Zealand and South Africa, where they do not receive the annual cost of living increase to their UK state pension.

“Over 90,000 of these overseas UK pensioners receive less than £20 per week, whereas, if they had remained in the UK, they would now be receiving £134 ($163, €150) per week. 

“The average for this cohort is just £11.11 per week. Could you live on that? I know I couldn’t,” he wrote in the letter.

Spare money

“In terms of informing both houses of parliament, you [Opperman] have told them that it will cost £3bn over a five-year period to uprate the state pension in ‘frozen’ countries,” Nelson added. 

“As you are aware, all national insurance contributions (NICs) are paid into the National Insurance Fund (NIF), and 94.4% of the fund is used to pay the state pension.”

Nelson went on to say that the NIF had a balance of £30 billion and that legally speaking, the fund must retain a sixth of the annual payment.

He continued: “In the year to 31 March 2019 alone, this excess grew by nearly £6bn. The government actuary’s department has forecast that this excess will grow to £41bn by 2023/24.

“In fact, the UK government has been able to afford to uprate all ‘frozen’ state pensions since 2016. It appears that you have not informed parliament of these facts. This goes to show just how economical with the facts you have been.”

Political tools

The reason for the lack of increase in state pension for these retirees is that their country of residence must have bilateral agreements in place with the UK. However, Nelson argues that the DWP revealed that bilateral agreements are not necessary for the uprating of state pensions.

“All it needs is a change in domestic UK legislation – something that you could do at a stroke of your pen which would go a long way to relieving the suffering felt by 500,000 UK pensioners living in ‘frozen’ countries,” the activist added.

“If you had a modicum of decency you would give parliament all the facts and not just cherry-pick those that support maintaining the status quo.”

If you need more frozen pension or financial advice, get in touch with Haven IFA today.