Frozen Pension Myths
With the compliments of British Age Pensioner Alliance

Myths examined, exposed and exploded.
Myth Number 1 - 2 - 3 - 4 - 5 - 6 - 7 - 8 - 9 - 10 - 11 - 12 - 13
Also see Another Myth to Fight
and Educating MPs

The British Government has never denied that pensioners living overseas are entitled to the same uprating as their stay-at-home compatriots. But they have over the years made many attempts to side-step the issue. In this essay we examine their excuses and expose them for being just that - lame excuses.

The excuses have been repeated so often that they have taken on the character of myths. In the Houses of Parliament, and in written communications, politicians and public servants have relied on these myths, giving them the guise of "policy". So let's look at them in detail.

(The list keeps on growing like Pinocchio's nose - remember the little wooden puppet whose nose grew every time he told a lie).

Myth Number 1 - 2 - 3 - 4 - 5 - 6 - 7 - 8 - 9 - 10 - 11 - 12 - 13

Myth no 1.

British pensioners living in Australia have their pensions supplemented by the Australian Social Security system.


The (now defunct) Agreement on Social Security between Australia and the United Kingdom was beneficial to emigrant pensioners during their first 10 years in Australia, provided they qualified under the means tests. After 10 years, a resident is entitled to a pension in his/her own right, subject to the means tests. Those who failed the means tests got no benefit from the Agreement.
When the agreement was terminated, Australia passed special legislation to protect the rights of migrants who were already resident in Australia but for less than 10 years.

Australian age pensions, and other similar benefits, are subject to two forms of means testing. The pension is reduced or even eliminated if other sources of income or total assets exceed threshold levels.

Myth Number 1 - 2 - 3 - 4 - 5 - 6 - 7 - 8 - 9 - 10 - 11 - 12 - 13

Myth no 2.

Overseas pensioners receive their uprating if they live in a country with which Britain has a reciprocal agreement.


Britain had a reciprocal agreement with Australia, and it did confer some benefits on British citizens emigrating to Australia and vice versa. But it made no provision for annual increases in pension to match those paid in the home country.

Australia does upgrade pensions of its overseas pensioners in line with the 6 monthly increments for resident pensioners. It does not need a reciprocal agreement and does not wait for one to be signed.

In 1988, Mr. Nicholas Scott, M.P., then Secretary-of-State agreed that "reciprocal agreements are not necessary to pay pensions to all beneficiaries living abroad at the same rates as those paid in the United Kingdom."

The Social Security Select Committee Report (January, 1997) conclusions included the statement:

"39. It would clearly be impractical to negotiate bilateral agreements with each of the other countries in the world where people draw British state retirement pensions, and in any case unnecessary; 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."

And on 10th Mar 1999 the following exchange took place:

Dr. Lynne Jones: To ask the Secretary of State for Social Security what discussions he has held with other Governments about extending bilateral agreements to protect the position of UK overseas pensioners; and if he will make a statement.

Mr. Timms: My right hon. Friend, the Secretary of State has held no discussions about extending bilateral Social Security agreements to cover uprating of UK State Pensions paid to pensioners living overseas. Bilateral agreements can be the means of providing annual increases of Retirement Pension, but that is not their primary purpose. An agreement is not strictly necessary to allow payment of pension increases, as that could be achieved through changing UK domestic legislation.

James Purnell: ...... Of course, it is not legally necessary to have a reciprocal arrangement before making such payments. Any Government could do that unilaterally. (Speaking in the debate on the Pensions Bill on 25th January 2007).

So when on 7th February 2000 Jeff Rooker said: "International treaties are the main factor, and there really should not be any argument about that." he was telling a porky (rhyming slang - pork pie). The Austrian government tried the same line of argument in the Gaygusuz case, but the ECHR rejected it.

An international treaty could force the government to do the honourable thing; but no treaty could prevent them from doing so.

In 1979, when Margaret Thatcher came to power, she broke off negotiations which could have led to the end of the "frozen" policy. This despite the fact that, in a letter to a South African pensioner in September 1975, she had said that she would be doing all she could in Parliament to help pensioners living in South Africa to benefit from pension increases, and this matter would be raised in the House of Commons.

In July 1994, Winston Churchill asked why the pensions of British pensioners living in the Falklands were frozen when Thatcher had spent so much money reclaiming these islands as British sovereign territory.

Myth Number 1 - 2 - 3 - 4 - 5 - 6 - 7 - 8 - 9 - 10 - 11 - 12 - 13

Myth no 3.

The Social Security system is designed primarily for people living in Britain. However desirable and worthwhile , . . . the substantial additional cost involved would have to be found from the money available for Social Security.


There are two quite separate sources of money for Social Security.

Source 1 is general revenue, the annual budget, funded by taxation. Call this "Social Welfare".

Source 2 is the National Insurance Fund funded by contributions from employees and their employers. Call this "Social Insurance".

The principles of the Beveridge Report, written in 1942, are still as valid today as they were then. The Atlee Labour government introduced a system of universal and uniform benefits, funded by universal contributions. The objective was to eliminate poverty and want. Basic benefits for all were to be provided from a state insurance fund, irrespective of needs, and without the indignity of a means test. Citizens were to be encouraged to supplement the state benefits by their own efforts, so that the number of people who relied on Social Welfare would be reduced.

It was never intended that Social Welfare benefits be paid from the Social Insurance fund.

In any event, this excuse would not justify discriminating between pensioners living in Darwin and those living in Dallas.

Myth Number 1 - 2 - 3 - 4 - 5 - 6 - 7 - 8 - 9 - 10 - 11 - 12 - 13

Myth no 4.

The United Kingdom Government feels that its priority is to direct the limited resources available to those pensioners in the United Kingdom who are in most need.


The United Kingdom Government feels that its priority is to direct the limited resources available to those politicians who are in most need - of votes. On 7th February 2000, Jeff Rooker put it more crudely "Frankly, we have other and better ways of spending £300 million." In the Gaygusuz case, the Austrian government tried to justify its discriminatory policies on the grounds that the money should be used for its own citizens; the Court was not prepared to accept this proposition.

The decision to uprate or not to uprate is not based on need, nor should it if the principles of the Beveridge report mean anything. The decision is based solely on country of residence. A needy pensioner living in Canada gets no uprating, while a well-off pensioner living in the USA does get uprating.

Here is a quote from a letter from the DSS dated 29/12/99:

Pensions are not uprated for immigrant workers who spend their working lives in Britain then return to the country of their roots to spend their retirement years among people of their own culture.

Pensions are uprated for pensioners living in the UK (who, after all, can determine by their vote whether an individual MP will be elected next time), and they are uprated for pensioners living in any country that has been able and willing to force the issue.

Money is available for vote buying exercises, such as granting free TV licenses to elderly voters. In effect, the government is guilty of fraudulent conversion, stealing money from "frozen" pensioners to buy votes for itself.

Myth Number 1 - 2 - 3 - 4 - 5 - 6 - 7 - 8 - 9 - 10 - 11 - 12 - 13

Myth no 5.

The country can't afford it.

False. (See myth nos 3 & 4 above.)

The National Insurance Fund has a surplus, according to the Government Actuary, and this surplus is steadily growing. In the past it reached a total of over 20 billion pounds.

Currently the surplus is increasing by 2.5 billion pounds a year, which is many times the annual cost which would be incurred in the National Insurance Fund if overseas pensioners were treated with fairness and justice.

Another angle on the argument arose in a letter from a British MP.

"A major consideration in deciding whether to enter into an agreement is the extent to which the advantages to be gained outweigh the cost of negotiating and administering the agreement."

This is the oddest piece of reasoning that we have seen for a while. The cost of negotiation would be a one-off cost, and would hardly justifying robbing the frozen pensioners year after year. Treating all pensioners alike would actually be simpler and therefore cheaper than the present mish-mash.

For example, at present they must record in the system that the pensioner is or is not resident in a frozen country. And when a pensioner in a frozen country goes on a world trip or goes back to the U.K. for a visit, they have to cope with the claims for uprating while the pensioner is in a non-frozen country. Unless of course the non-frozen country is the U.S.A.

So if pensions were unfrozen, and all pensioners treated alike, the cost of administration would be reduced.

The annual cost of social security fraud is over fifteen times the cost of the missing uprating

The government has lavished money on building new offices for Members of Parliament. The money being spent on these would be enough to meet the cost of uprating for all frozen overseas pensioners for one year.

The government has allocated hundreds of millions to give free television licenses to pensioners over age 75. One minister remarked that this was "cheap, given the number of voters who benefit".

Myth Number 1 - 2 - 3 - 4 - 5 - 6 - 7 - 8 - 9 - 10 - 11 - 12 - 13

Myth no 6.

As expressed by Baroness Hollis "pensioners who live abroad have chosen to do so, and they knew that their pension would be frozen when they made that decision."

Partly true.

The same lame excuse was used by Jeff Rooker on 7th February 2000. "Before people leave the country, they fully know the rules on how pensions are uprated around the world. There is no secret about the countries with which we have international treaties."

In an 84-page booklet issued by the Department of Social Security, you can, if you search long enough, find a statement that pensions are uprated only for emigrants to certain countries. You are left to deduce for yourself that the old "empire" countries are not among the favoured nations.

Pension freezing is a hidden clause, buried in the fine print of the social insurance system. It is simply not good enough to bring it out and brandish it when a pensioner emigrates; by then it is too late to do anything about it. This is specially so in the case of SERPS pensions, because a decision whether to contract out could have been affected by knowledge of this secret condition.

The author was not told, when he emigrated as a young man, that his part pension bought (bought) by his own contributions would be frozen. Nor were his parents told that if they decided to spend the last years of their lives with their son and their grandchildren their pensions would be frozen.

But even if this myth were wholly true it would be heartless and unethical.

If someone were to ring the noble Baroness and tell her: "I am coming to rob you", and then did exactly that, would it be a good defence in court? "Your honour, I told the lady that I would rob her, so I think it is her own fault."

Would this be a good defence? Or would it be instead evidence of criminal intent? In this myth, is the Baroness really saying that all past governments and the present government knew what they were doing, and always intended to rob overseas pensioners?

Jeremy Corbyn (Islington, N) said it well. "people live in countries for a variety of family and related reasons,"

In a piece published in a Canadian newspaper in 1995, one sufferer wrote:

I have a 93-year-old mother who has a frozen pension. She has been frozen for 11 years. She was able to keep up by doing some back and forth. But she became too frail to travel and settled here - like people do when they reach pensionable age and choose to spend their last years in Canada with the kids and grandkids."

Myth Number 1 - 2 - 3 - 4 - 5 - 6 - 7 - 8 - 9 - 10 - 11 - 12 - 13

Myth no 7.

Not exactly a myth, but an escape mechanism used by politicians in the guise of sympathetic support, i.e.:
"I understand the strength of your feelings about this," "I think you have a strong logical case." "this unquestionable injustice "


but such apparently supportive sentiments are so often followed by "but". " but I think you are also aware of the UK Government policies on the matter." "but I am bound by party rules."

The truth is that the UK Governments of all three colours (blue, red, and the current mauve) have always been driven by the ballot box, and individual members are driven by the party whip. When in opposition, parties support the arguments of pensioners resident overseas, but when in government they follow the same policies as their predecessors.

This is not a party matter. It is a matter of conscience. It is a matter of National Honour.

A Government Green Paper published in early 1999 entitled:

"Partnership in Pensions - A new contract in welfare" said:

"Everyone entitled to a UK pension should be able to get access to good quality welfare services, wherever in the world they happen to be. Increasingly, many people who build up their pension entitlement in the UK move abroad when they retire. We mean to ensure that these customers also get the best possible service."


"The basic state pension will remain as the foundation of retirement income for rich and poor alike. It will not be means tested. We will raise it in line with prices, to keep its real value over time."

BUT the Pensions Minister confirms the discrimination against expatriates will continue.

Myth Number 1 - 2 - 3 - 4 - 5 - 6 - 7 - 8 - 9 - 10 - 11 - 12 - 13

Myth no 8.

Australian residents overseas who fail the Australian means test must be well off and do not need to have their pensions uprated.


Australians living overseas who fail the Australian means test have done exactly what the Beveridge Report was anxious to encourage - make additional provision for themselves.

No such criterion is applied to UK pensioners resident in the UK or in Europe or in the USA. Pensions are uprated even for those who have made adequate additional provision for themselves.

No such criterion would be permitted in private occupational schemes. No pension fund administrator would be allowed to argue "These people are well off, so we will pay them a lower benefit than the rest of our members."

In any event, this excuse would not justify discriminating between pensioners living in Manitoba and those living in Michigan.

Myth Number 1 - 2 - 3 - 4 - 5 - 6 - 7 - 8 - 9 - 10 - 11 - 12 - 13

Myth no 9.

It has always been like this. (Not usually expressed as bluntly as this).


In the first place, the antiquity of an injustice does not excuse it. Magna Carta was written to correct long-standing injustices!

In a speech in the House of Lords, Baroness Fookes reported that Lord Shore of Stepney, who was a Member of the Cabinet which made the decision in the first place explained that the only reason upratings for overseas pensioners were not allowed was that there were severe exchange control difficulties at a time when tourists were allowed to take out only £50 in currency.  Thus it was a precautionary measure in a time of monetary crisis.

Jeff Rooker has admitted that there is no logic in the distinction between frozen and unfrozen countries. In a BBC program broadcast on 16th October 2000, he said: "There isn't a logical pattern. There are 130 countries where the pension is frozen and 40 countries where it's uprated every year. This is for historical reasons . I don't seek to defend the logic by the way......"

The situation has changed over many years as gradually the British government has been forced to pay annual increases in more and more countries. Before Thatcher the government was moving to change the system.

Here is an excerpt from a "boiler plate" letter received from one of the Minister's assistants:

"Pensions have been payable in certain countries outside the UK since 1929 - initially in HM Dominions and then, between 1948-1955, in a small number of European countries, In 1955, retirement pensions and widows benefits became payable worldwide. Upratings were not normally payable. Upratings were less frequent then than they are now and the fact that they were not generally payable abroad seems not to have been considered controversial."

"The last to come into force which provided for upratings was in 1992 (with Barbados) and fulfilled a commitment given in the 1970s."

Does it really take 20 years?

Here is a fuller explanation received from DSS in May 2000.

When the rate of pension was increased in 1946, the increase was not paid to pensioners abroad. The reasons for this decision appear to have been related mainly to then forthcoming new schemes of National Insurance. It was considered that the substantial increase in pension, from 10 to 26 shillings, was a first instalment of the new scheme and that pensioners abroad had made only a small contribution to their pensions and could not reasonably expect a share in the new scheme.

To which one BAPA member responded:

I paid my National Insurance contributions IN FULL since starting work in 1945. and until I migrated to Australia in 1991. During that period neither my wife or myself were ever informed either by correspondence or verbally that if we ever left the U K we would forfeit the right to our rightful FULL pension therefore the pensions of myself and my wife should be uprated.

Myth Number 1 - 2 - 3 - 4 - 5 - 6 - 7 - 8 - 9 - 10 - 11 - 12 - 13

Myth no 10.

Your contributions do not entitle you to benefit.

Here is the full version of the myth as expressed in a letter from the Minister's office.

"Ever since it was established the NI scheme has worked on a 'pay-as-you-go' basis. This year's contributions go to this year's pensioners. An individual's contributions provide a foundation for calculating personal future benefit entitlement, but do not actually pay for those benefits."


When a scheme is run on a pay-as-you-go basis, this is another way of saying that the scheme is "unfunded"; that the contributions are not invested to provide for future benefits; that the government spent contributors' money instead of saving it for them. Private pension schemes are always funded, but it is not unusual for civil service and parliamentary pensions to be paid from an unfunded scheme.

The failure to fund the scheme does not defeat the members' rights to benefit - unless, of course, all the funds have been embezzled as happened in the "Maxwell" fund.

But the department's letter does at least acknowledge the link between contributions and benefit entitlement.

A distinction can be made between Social Insurance and Social Welfare. Social Insurance implies that the pensions are granted as of right because they have been purchased by past contributions. Social Welfare implies that the pension is granted because of need. A social insurance pension is not means tested; a social welfare pension is.

But even if this myth is still held as Gospel truth, consider the fact that UK pensioners who retire to Australia were, in their working lifetime, taxpayers whose taxes paid for other people's pensions. Why should they now be treated worse than pensioners who live in the UK, or those who live in Milwaukee? Are not all pensions paid from a taxpayer supported fund, and should they not all be treated alike. Bear in mind also that overseas pensioners do not claim other taxpayer funded benefits such as winter fuel payment, bus passes, and health benefits.

Myth Number 1 - 2 - 3 - 4 - 5 - 6 - 7 - 8 - 9 - 10 - 11 - 12 - 13

Myth no 11.

Any uprating of pensions for pensioners in Australia would only result in more money going into the Australian Treasury.

This was the line peddled by Oliver Heald and his staffers during the 1996 hearings of the Social Security Committee.

Jeff Rooker said much the same thing in the House of Commons on Monday 13 November 2000:

If the Government did change their policy in respect of Australia, we would be paying to the Australian Treasury.

A callous attitude to a sister country.

What they should have said was "Any uprating of pensions for pensioners in Australia would only result in more money going to relieve the burden on the Australian Taxpayer."

In any event it is only partly true. Apart from new migrants who receive an Australian pension under the ten-year rule of the (recently terminated) agreement, all UK pensioners would retain some or all of the uprating for their own benefit.

Myth Number 1 - 2 - 3 - 4 - 5 - 6 - 7 - 8 - 9 - 10 - 11 - 12 - 13

Myth no 12.

In 19xx, the UK paid over £nnn million to UK pensioners living in Australia. Those people are contributing to the Australian economy and very many will have done so for many years as workers in Australia before they retired.

Fatally Flawed and Fractured!

The people most greatly affected are those who have moved to Australia on or after retirement in order to join children who emigrated in earlier years. After a lifetime of contributing to the UK economy and the National Insurance Fund, they have a pension of 100% of the base rate, plus, in many cases, SERPS pension. Such pensioners never contributed to the Australian economy as workers.

Their children came to Australia as migrants in the prime of life under the £10 migrant scheme, and their pensions, if any, are proportional to the number of years they contributed to the UK economy. Their grand children were either born here or came as young family members and have no entitlement to a UK pension; which is reasonable, since they never contributed to the UK economy nor to the NIF.

These children and grandchildren are Australian taxpayers who have to shoulder part of the burden caused by the UK government's failure to honour its responsibilities.

Another point worth noting is that British citizens who spend a large part of their working life in Australia, then return to Britain prior to retiring age, get a fully indexed pension. In most cases the pension would be 100% of the standard rate. And all this without contributing to the NIF and to the British economy during the years spent in Australia.

Myth Number 1 - 2 - 3 - 4 - 5 - 6 - 7 - 8 - 9 - 10 - 11 - 12 - 13

Myth no 13.

The rate of contribution payable has never included any element for the indexation of pensions payable abroad.

Specious, sophistry, red herring.

The Government Actuary simply does not use fine grained calculation methods. He uses a crude projection of the gross benefit payments of recent years in an attempt to predict the total benefit payments of the next few years, and adjusts his calculations regularly to allow for emerging trends.

As a consequence, there is allowance for indexation of pensions payable in Israel and the freezing of pensions payable in India. There is allowance for the paying of uprated pensions during a temporary visit to the UK, and for the non-payment of pension uprating to people who either do not know about temporary uprating or are deprived of it because they are unaware of the periodic changes and inconsistencies in the rules.

In consequence of the method used, the current contribution rates do contain elements for all the variations mentioned above.

Here are some points to ponder.

1.The reasoning is back to front. If there were any merit in this statement, it certainly could not be advanced as the reason, nor as justification, for the lack of indexation. It is the lack of indexation that affects the calculation rather than the calculation method justifying the lack of indexation.

2. The total cost of uprating pensions for expatriates would make but a small dent in the annual accrual of surplus in the NIF, and a minuscule adjustment in the rate of contribution paid by current contributors.

3. When collecting class 3 contributions, the department makes no distinction between those who contemplate receiving an indexed pension and those who will have their pensions frozen. The same rate of contribution is applied to both groups.

4. No differentiation in contribution rate is made between those with a propensity to emigrate because they have grandchildren living in a "frozen" country and those who do not.

5. When challenged by a frozen pensioner in Canada a high up official in the DWP admitted that it was a lame excuse

It is clear that the writer was defending a statement provided from on high, a statement that she did not understand and expected that the average pensioner will not understand.

Myth Number 1 - 2 - 3 - 4 - 5 - 6 - 7 - 8 - 9 - 10 - 11 - 12 - 13

Yet more myths

The underlying question after all these myths have been exposed remains:

Why practice selective discrimination? Why advance such arguments against unfreezing pensions for Australian residents, but not apply them in the case of American residents?

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