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Nearly one half of expatriate UK pensioners have their pensions uprated every year on the same basis as resident pensioners. The others have their pensions frozen - that is, the pension never increases after the first payment made outside the UK.
Jeff Rooker, at that time the responsible minister, admitted
that there was no logic in the selection of which countries would be in the
frozen group and which in the indexed group. Saying it is "illogical" is an
understatement; it is absurd.
Among the absurdities, British pensioners living in France or Spain have their
pensions indexed; pensioners living in Andorra have them frozen. Likewise
pensioners in France and Italy receive indexation; those living in Monaco don't.
*
French overseas territories are in the indexed group. British overseas and
dependencies are in the frozen group.
Britain claims that pensions are indexed where the country of residence has a
reciprocal agreement with Britain that specifies indexation. This is something
that is out of the control of the pensioner. Is it not absurd to say that a
pensioner living in Canada, say, should have his British pension rights
depending on an accident of history over which he had no control.
Another absurdity arises where two people with identical contribution records
and living in the same overseas country have different pensions just because
they emigrated at different times. H retired in 1991 with a full basic pension,
and retired to Australia. Because he emigrated before April 1991 his pension is
frozen at the 1990 rate. P also retired in 1991 with a full basic pension.
Because he emigrated in 1997 his basic pension is frozen at the 1997 rate.
H's pension is only 3/4 of P's pension. Note that between 1991 and 1997 P made
no further contribution to the National Insurance Fund.
So their fate depends not only on the existence or otherwise of a reciprocal
agreement, but on the date of emigration.
In view of these illogical and absurd results it can hardly be claimed that the
British government are applying a well constructed and considered set of rules
for age pensions.
Note * This has been confirmed by a senior officer of the DWP in an email
received 21 April 2009.
See also anomalies