Link to Home Page

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.

One example that has been mentioned is a UK pensioner in Australia who contributed to the National Insurance Scheme all his working life, got a pension of £6.75 in 1972, and has never had his pension increased with the cost of living.

There are many other strange results, all arising from the way the freezing regime is run.

Here are a few of the bizarre results.

Age and sex differences.

Adam, born in 1928, retires in 1993 with a pension of £56.10, and decides to move to Australia to be near his only child and her children. In 2003 his pension is still £56.10.

Bill, born in 1938, retiring in 2003 and moving to Australia, would have a pension of £77.45 - a difference of 38%. The freezing system has introduced an age difference.

Cherie, also born 1938, retires in 1998 with a full pension of £64.70 and moves to Australia. By 2003 her pension will still be £64.70 while Bill, the same age as Cherie, has a pension of £77.45. The freezing system has introduced a sex difference.

Supposing that Bill had spent some time out of the National Insurance System and had a reduced pension. Let's suppose he had contributed for 37 years out of a possible 44, and has a pension of 85% of the standard rate. His pension will be £ 65.83. So he gets more pension than Adam even though he had contributed for fewer years.

If Cherie had stayed in Britain another 5 years, and moved to Australia in 2003, her pension would also be £77.45. But that would have meant 5 years' separation from her only grandchildren, or regular flights half way round the world to visit them.

Now these apparent age and sex differences are not deliberate results of the way the system is administered. The apparent sex discrimination will disappear for women born in 1955 and later, but will persist for women born earlier. These differences arise because the system has never been properly thought out.

More complex scenarios.

When we investigate more complex cases we find the results become even more bizarre.

Take the case of Jean who emigrated with her husband in 1995. As she had contributed to the state pension scheme for 25 years she has a pension of 65% of the basic rate, £38.25 but frozen at its 1995 level.

Her cousin Joanne had not worked long enough to get a pension in her own right, but has the married woman's pension, which is almost 60% of the standard basic rate. When they emigrated to Australia in 2002, her pension was £45.20, frozen from 2002 - more than her cousin gets.

Jennifer and her husband, both born in 1937, emigrated in 1997. Jennifer had contributed for 16 years, so she has a pension 42% of the standard rate - £26.23. Her husband keeps up his contributions and retires in 2002 with a full pension of £75.50. Because Jennifer has some pension in her own right she does not get the full married woman's pension (category B). Instead she gets a composite pension of £37.35 - frozen at the 1997 pension rates. Although her composite pension started in 2002, it is frozen at the 1997 level.

If Jennifer had never contributed to the NIS, she would get a category B pension of £45.20 frozen at the 2002 rates.

What are the principles involved?

An officer of the pensions service wrote: "The easiest way to look upon the position regarding married women's topped-up State Pension in countries that do not attract upratings, is that the maximum topped-up rate is based on the date of the woman's own Category A entitlement."

Here is an example of how this "doctrine" works.

Janet reaches retirement age in 2000 with enough contributions to get a 35% category A pension of £23.63 per week, frozen at the 2000 rates.

Her husband reaches pension age in 2003 and has a pension 32% of the standard rate, based on 14 qualifying years. Janet now gets an additional pension based on her husband's contributions. It is 32% of the category B rate.

If she did not have enough qualifying years to get any category A pension, her category B pension would be £14.83, frozen at the 2003 rates. But because the DWP can apparently only record one "freezing date" in its computer, her category B pension is reduced to £12.93, frozen at the 2000 rates.

These are among the odd results thrown up by the pension freezing regime. They would not have happened if they had gone to live in Manila or Miami. But because they live in Australia their pensions are frozen. If they return to live in the UK, or go to live in New York, these anomalies will disappear. If they visit the UK, or France or Germany (but not USA) the anomalies will be removed temporarily and they will get the same pension as if they lived in Manchester - but only until they return to their "frozen" country.

Anomalies based on pensioner's place of residence.

If you live in France, your UK pension is uprated every year. Likewise if you live in Spain. But if you live in between, in Andorra, your UK pension is frozen.

If you live in the Caribbean island of St Martin, your pension is indexed if you live in the French part, but frozen if you live in the Dutch part.

It's not even a question of the affluence or poverty of the country of residence. Some indexed countries are rich, as are some frozen countries. Some in both groups are poor countries, and some are middling well-off, thank you.

The freezing regime continues because top civil servants keep on dreaming up fatuous excuses and offer these as advice to the relevant Minister. Anomalies then become Absurd Results.