Ms Carson was given no right to appeal to the House of Lords and was also ordered to pay costs.

Ms Carson is among an estimated 490,000 British pensioners who live overseas and have had their pensions "frozen" at the rate they were first paid abroad.

Critics of the current system believe it is an unfair lottery - and penalises people who have paid national insurance contributions all their working lives.

It can mean some of the oldest pensioners in mainly Commonwealth countries are left on a basic pension as little as £7 per week - less than a tenth of the current level.

According to latest government figures - given on 16 May - 410,000 pensioners who retired elsewhere get their pension fully upgraded each year.

Rhian Beynon, spokesman for Age Concern, said the court's decision would be a "real blow" to many older people living abroad - some of whom were living in considerable hardship.

She called on the government to pay up, despite the judgement.

"Given the injustice of the situation we would urge the government to keep looking at ways of resolving the issue," she told BBC News Online.

Under bilateral agreements with countries including US and EU members, the government has upgraded pensions for British people who retire there.

But social security agreements with other countries such as Canada, South Africa and Australia were drawn up much earlier, in the 1950s, before inflation became such an important issue.

Are you affected by this pension judgement? Tell us what you think.

At the beginning of WWII my father joined the Royal Navy. He saw some of the fiercest combat at sea and was involved in three Russian convoys. He joined the Navy at age 17 knowing this to be right and that his country needed him. He is now 81 and lives with me, his only daughter, in Canada. The British pension he receives is a sham. If it were not for this great country of Canada to help supplement the pittance he receives from Britain he would be in a very sorry state. Shame on you Britain!
Joan Leigh, Canada

My Mother worked all her life and for the last 40+ years for the National Health Service. I came to live and work in Panama. So she came to live here close to the family. As a result she has lost her rights to the inflation increase, why should her rights be abolished due to her choice to live abroad? Full contributions have been paid therefore she should have her entitlement no matter her choice of abode. Also she is no longer putting any requirement on the Social system in the UK, National Health etc. No Sense, No Justice!
Gerard A Dowden, Panama

I think that possibly the government is not too happy that the money they pay out would not then be spent in Britain and so therefore recoupable in the form of VAT and other taxes, even death duties (or inheritance tax, to give it it's 'nicer' name), which are really quite evil, even by tax standards. Unfortunately it appears that we have to get used to the idea that we're all just a commodity rather than an individual and if we choose to take ourselves out of the market, i.e to another country, we will not be invested in any further.
Paul Rowlinson, England

A number of the comments above appear to miss a vital point. National Insurance contributions, regrettably in my view, are not saved to pay for your future pension. They are a tax which (partly) pays for the current NHS, Social Security and State Pension costs. Paying NI all one's working life does not provide a future entitlement to anything. What one gets is at the whim of the Government of the day and its judgement of the best route to re-election.
Nigel Parkinson, England

I feel that the government is not giving due consideration to pensioners who gave up many years (in my case six) to fight in WWII. I feel we have been unjustly penalised merely because we live in a country that is not on an official list whereas certain other countries are included who may or may have not contributed to the war effort.
A E Humphrey, Zimbabwe

Shameful judgement. This is yet more proof that these judges do not reflect the opinions of the British people. It will be interesting to see if this goes to the European Court of Human Rights. I understood that governments were not allowed to restrict freedom of movement. This pension anomaly clearly does just that.
Ian, England

My parents are considering retiring to the Caribbean as they have worked all their lives in the UK helping to build this country at the cost of their own. Their own country is suffering terribly economically which in part is due to the exploitation from countries such as the UK. Now that they have a chance to assist in their countries development via the economy, they are again limited due to this unfair policy.
Sylvia Smith-Joseph, UK

I am a 40 year old man and I sincerely sympathise with this poor lady. I am ashamed to call myself British. The logic behind such decisions as this baffles all and can be attributed to this so-called government's 'couldn't care less' attitude. Both private and state pensions are in a mess and there is no light at the end of the tunnel. I wonder if the government's tactics are to get as many people sick and tired of being ripped off as possible so that they leave UK for a better life and reduce our health, housing bills etc. I am disgusted by it all.
Jim O'Donnell, UK

There is simply nothing that can be added to the comments that have been posted on this subject. Virtually all of them do not agree with the judgement! There is no natural justice or consistency in it, simply political convenience to save this over-spending government money by stealing what is rightfully due to a relatively small number of pensioners. Just because they have decided to retire to 'friendly' or Commonwealth countries, they lose increasing amounts of the pension that would have been theirs if they had stayed in the UK and used UK services. The government wins two ways - they don't pay the pension due, neither do they have to support the pensioners in their last years. I used to have confidence in the English legal system, but this has shaken that confidence very severely.
Stephen Winfield, England

The whole issue of pension provision is increasingly worrying - and I am only in my 30s. There seems to be little safeguards in place for pensions in the UK and, even if you do contribute on a regular basis, you seem to be penalised and taxed to the ninth degree for having done so. No wonder more and more people are opting out of pension schemes and investing in other areas such as property. Sadly, whilst the Government is keen on the UK joining the Euro and the EU in its entirety they seem very reluctant to ensure that UK pensions are in line with the much more generous pensions across the EU. Tell me again, what benefit is there in being British?
Janek Czekaj, Wales

If the government froze all overseas pensions it would be short sighted but at least consistent - to vary the policy depending upon where you choose to settle is blatant discrimination!
T Lawson, England

That this system is unfair is clear. Why this system is unfair is equally clear: these people pose no threat to this or any UK government - the government therefore does not need to court these expats for re-election; secondly, the government are afraid that if they overturned the decision not to inflation-proof their pensions, they would be faced with a very hefty bill to give them their back pay. So much for the fairness of socialism! So much for the fairness of the British!
Richard Lewis, UK

Totally unfair. My mother lived in Belgium and paid her NI there for some years. On her return to the UK she received full Belgian state pension, adjusted for inflation and exchange rate fluctuations, until she died. Why can't the UK respect its own citizens in this way? The UK retains the right to tax you on your worldwide income - why can't it pay you your dues no matter where you live? Another example of the hypocrisy we are getting all-too used to.
Euan, Scotland

What an appalling ruling! What on earth can the justification be - other than for the British government not to pay out what is owed to all those people who had no choice but to pay into the state pension scheme? Why are Spain and the USA given advantages over commonwealth countries? It is so unjust!
E J Pert, UK

Justice? Yeah, right. There is only political expediency. If there were enough of an outcry it would be changed but those affected are resident elsewhere and they have no clout. My elderly in-laws were also caught, and have now returned to the UK where they are heavily dependant on local NHS and social services - It's cost the government much more than a fair pension would have cost.
Peter Ingle, UK

This problem is a part of a larger problem, which is also becoming an issue in Spain. The government no longer wishes to be responsible for the provision of pensions and urges everyone to take on the provision of their pension themselves. To do so individuals require sufficient income and at present there is no corresponding pressure by the government on employers to boost salaries with the necessary increase. In our experience families with young children rarely have surplus income at the crucial time.
Jeremy Sweetman, Spain

I am a Canadian citizen who has spent most of his working life in the UK and draws a UK pension. My intention is to stay in the UK but if circumstances change I might well want to live with two of my daughters and my grandchildren who live in Canada. Why I should be penalised for doing so I do not understand. It offends every principle of natural justice. It is particularly galling when it comes from a government who, when in opposition, declared it Labour Party policy to correct this anomaly. And then politicians wonder why we no longer believe what they say. It is also incredibly unfair on the taxpayers of countries like Canada, Australia and New Zealand who are subsidising British pensioners. What a reward for coming immediately to our assistance when we needed them during the Second World War. This government should hold its head in shame.
Jack Pigden, UK

In reply to Jack Pigden. The various governments of this country have no shame. I think it is absolutely disgraceful the way we have treated the countries of the Commonwealth that, as you say spring to our defence in time of trouble.
J. Grinton, UK

If people have paid their correct National Insurance contributions then they should receive the same pension rights as pensioners living in the UK. The Government's hiding behind old treaties is an abrogation of their responsibilities - how would they like it if 400,000 pensioners suddenly came home and insisted on full pensions, Housing Benefit, NHS treatment etc? It would cost them a whole lot more then!
Grant Williams, England

My parents retired to South Africa and are also discriminated against with their pensions. They contributed to NI for almost 40 years and cannot get what is rightly theirs. I find it most odd that the countries where the pensions are not upgraded are Commonwealth members while the upgrades go to countries in which the UK has had no political involvement.
Jim Clews, UK

This situation does not affect me as I am still working, but working overseas and not entitled to pay into any pension scheme in Britain except the basic voluntary contributions. I must look after myself. I believe this ruling is grossly unjust and shows bizarre logic when one looks at the geographical contradictions. I can understand a government wanting to avoid a hefty increase in its present pension bill but that it is not the sign of a morally just government. To do it at the expense of these people who have paid into the scheme all their lives is totally unacceptable. Just as this Labour party reduced the number of citizens overseas who could vote in elections through a reduction in the time one could be on the overseas electoral role, is this too a case of the Labour party assuming that anyone working or living overseas is a member of the Tory party? If they were not when they left the UK, many will be now.
Dr Kathryn Monk, UK

Yet again a case of people who make a life choice then aren't happy with the consequences. You can't just choose all the best bits of life and have them. She chose to go to South Africa and have all the benefits of that decision. There were some drawbacks too. Live with it.
Damien Mackinney, England

Damien MacKinney seems to be the only person with any sense. At the end of the day, if you want to live abroad you should understand the consequences of your actions. There are many issues of unfairness, not least immigration issues, the penal system and the huge number of individuals who drain the state of finance for their own selfish needs and with no desire or incentive to contribute to a good society. Those people who choose to turn their back on the UK by living abroad during their retirement should stop thinking that the UK owes them a living on their terms.
D B Ash, UK

In response to Messrs McKinney and Ash, my father did not turn his back on the UK. In fact when he was asked to serve his country in WWII he did. This is the thanks he received for fighting in the war and working for 15 years in the UK where incidentally, he did not receive a company pension either.

The injustice of this case is particularly galling because if my dad used a US post box or lived in America he would be entitlted to a full pension. Instead he gets £15 a week because he chose to live in Canada. This judgement is a grave injustice for British pensioners living in Commonwealth countries and particularly galling for those who fought for their country.
John Pennant, France

Sorry Damien but you're missing the point. This is yet another classic case of double standards as practised by the British government. Some pensioners do benefit from upgrading on the basis of where they chose to settle. For the government to refuse to extend those benefits to all on the basis of cost is simply unfair. If it's right for some, it's right for all and the government should put right the injustice and pay up. I'm sure it could make the necessary savings in other more dubious areas of its spending but that would be a whole new discussion!
Rob Dixon, England

If national insurance is paid, then surely there should be recompense for this on an equitable basis, i.e. the same amount that one would be paid living in the UK. As a New Zealander who has been living in the UK for the last 12 years, I am considering a return to my home country as my ageing mother, daughter and grandchildren all live there. The NZ government advises that I will receive a full pension if I return before I am 60 (I am just 57), but they would look to the UK government to supplement this due to tax credits and national insurance paid in this country. The Australian government, where I also lived for 12 years, would be asked to supplement the NZ pension as well. Unfortunately, I have not thus far managed to get any comment whatsoever from the Australian government over their views.
Vivienne DuBourdieu, England

My mother, who worked as a nurse and midwife in the NHS and paid national insurance contributions for many years, now lives in Australia and finds her pension frozen. I think this is outrageous. Australia is a commonwealth country. She's there because there are important family ties and yet she's penalised. Surely she should be entitled to increases. Why can't she have the money paid into a UK account? It can't cost the treasury any more. Banking systems are so sophisticated these days that we can draw money out anywhere. What difference does it make whether she lives in Britain, Australia, Mongolia or Narnia?
Hamish, UK

As a Canadian who has lived in the UK for the past 25 years, but has considered moving back, I am aghast at the judgement. So, my UK taxes are now "subsidising" adjusted pensions from which I may not benefit. I just can't see the fairness in that. Time to leave the Commonwealth.
John Samuel, Canadian in the UK

My retired Mum also lives in South Africa and it's not called discrimination in my view it is stealing. I fail to understand why there is no right of appeal and I feel sincerely sorry for Mrs Carson - I hope she gets financial help with these iniquitous costs that she truly doesn't deserve. After a lifetime of work (including the services in wartime) my parents' retirement to SA means that they use no UK services so costly to the government such as hospitals, transport or residential care. I am disgusted and fed up with this attitude which sees millions of pounds of our taxes paid out to asylum seekers and foreign aid and which fails to treat its own citizens with the respect that is due to them.
Clare Spencer, UK

It is incredibly unfair that this is happening. I agree with Clare Spencer fully. It is disgusting to see UK citizens being treated this way - simply because of where they have chosen to retire. My father, who is living in Swaziland (Southern Africa) is always facing increased living costs (as all are around the world). Is his lifetime of contributions worth less than those made by his peers inside the UK? I am definitely for the idea of helping asylum seekers and the like - but I firmly believe that it is the duty of the UK government to ensure the welfare of its own people first and foremost. The government really needs to re-think and do something about this.
Richard Fenwick, UK

Although not of retirement age, I feel this policy is really unfair because I live in a region of the world where my pension would be frozen. Would like to ask the British government, where is the fairness in this policy or, does the UK government consider it fair to discriminate just because I happen to live in a certain region of the world and not another?
Mr. Edward Fernandes, Hong Kong

The UK government remains totally unreceptive to the concerns of people like us who have had to pay all of their working lives for pension entitlements. Their attitude is both unfair and discriminatory. No doubt when the time comes for the MPs to retire they will enjoy over inflated pensions to go with their equally inflated egos.
John Hodges, Australia