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Apologia (1) and Apoplexy (2) |
Government excuses and pensioner rejoinders.
| Government Attempted Justification | Expatriate Pensioner Exasperation |
| The British Government has never denied that expatriate pensioners 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 section we examine their excuses and expose them for being just that - lame excuses. | |
"the Social Security system is designed primarily for people living in this country However desirable and worthwhile , . . . the substantial additional cost involved . . . would have to be found from the money available for Social Security " |
This confuses tax-funded social security benefits, designed for British circumstances and administered at Government discretion, with the UK retirement pension system funded by compulsory contributions into what is in effect a state superannuation scheme. This carries the obligation to treat all contributors equally, and discrimination by domicile is both inappropriate and unacceptable. Furthermore, the estimated cost would raise the retirement pension budget by only 0.8%, and the total social security budget by 0.25%. The issue is not one of budgetary increases, but of the Government honouring its obligation to pay all pensioners amounts strictly proportionate to contributions out of whatever total sum can be made available for the payment of pensions worldwide.
| "although we have a reciprocal agreement with Australia, it does not provide for pensions increases . . . (the agreement ) can help a UK pensioner to qualify for an Australian age pension. Age pension is however payable subject to income and asset tests which are covered by Australian domestic legislation and not the reciprocal agreement" |
Reciprocal agreements are irrelevant; the Government has conceded that: "Full indexation of British pensions world-wide could be achieved by a simple change in our domestic legislation" (PUS for Social Security Mrs Gillian Shephard. 16 October 1990). Australia pays uprating to its pensioners living in Britain without any reciprocal agreement on uprating.
Besides, Australia pays uprating to its own expatriate pensioners living in Britain, without the need for a reciprocal agreement.
Over a third of expatriate British pensioners receive no Australian age pension. By exercising thrift and restraint throughout their working lives, they accumulated savings (encouraged by the fervent exhortations of the Government of the day during the almost continuous Sterling crises) in order to supplement the basic UK index-linked retirement pension. They had no qualms about saving since UK pensions had never been means tested. They now find it is those hard-won savings which exclude them from the means-tested Australian pension, through which the UK Government seeks to circumvent its uprating obligation. The British pension is purely a British responsibility and cannot be wished onto the Australian taxpayer.
"The payment of pensions in EC countries is covered by EC regulations rather than our domestic legislation" |
This demeaning excuse says, in effect, that when its bluff is called, the UK Government will submit to pressure without putting forward in its defence the spurious arguments which unorganised expatriate pensioners are expected to swallow. Moreover, all other European nations index link the pensions of their expatriate retirees. Britain alone stands disgraced by its pettiness.
| "Most of the agreements with other countries outside the EC which allow increases to be paid there were entered into a long time ago when constraints on public spending were not as great as they are today". |
The issue is not constraints on public spending but a collapse in political morality.The Government admits the relationship between contributor and State is an agreement giving entitlement to benefit. It therefore follows that benefits paid must relate strictly to contributions. An insurance company which, pleading poverty, arbitrarily paid some superannuants less than others, all having paid the same premiums, would be prosecuted. And the 1995 Pensions Act made pensions' uprating mandatory in all occupational schemes.
In 1990/91 investment income from the National Insurance Fund balance of £12 billion (accumulated from our excess contributions) was producing enough to fund indexing into perpetuity. Then the Government, seeking electoral advantage by portraying itself as the low taxation party, significantly reduced the level of contributions and diverted a major part of the accumulated surplus to other purposes. Within two years the balance had fallen to £3 billion. This diversion of funds was economically inept and a breach of fiduciary responsibility.
| "Money received by pensioners in the UK is largely spent on goods and services in the UK. Pension money received by those resident in Australia is not clawed back through indirect taxation in UK" |
It is a curious argument that index linking is denied because some twenty percent of revenue from indirect taxation might be lost. The choice by pensioners of an overseas domicile results in huge savings in health and other social benefits, many times greater than the cost of indexing, yet the Government dismisses the claim as hypothetical.
This argument does not prevent them from paying increases to pensioners residing in other overseas countries.
"The
agreement between an individual and the State is that
payment of contributions will give entitlement to benefit
subject to certain conditions. The conditions are set out
in our leaflets. For example - Retirement Pension
upratings are not generally payable abroad" |
This condition, in the small print of an obscure leaflet, has never been given any publicity, and since 43% of expatriate pensioners in 33 countries now benefit from indexing, it can have no further relevance. Contributors noted pensions being uprated annually to compensate for higher living costs, funded by periodic increases in their own contributions. Their unquestioning acceptance of the fairness of the system was reinforced by the categorical assurances given by the Secretary of State for Social Services (Sir) Norman Fowler in his 1985 Green Paper:
1985 Green Paper: - in return for contributions, benefits would be given as of right - all insured people - rich or poor - would pay the same contributions for the same security - the basic national insurance pension must remain as an entitlement earned by people from paying national insurance contributions. That has been at the heart of our national insurance system since its inception and the Government are committed to it. |
On 11th October 1999, in a debate in the House of Lords, Baroness Hollis repeated this furphy when she said:
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Noble Lords must also recognise that pensioners who live abroad have chosen to do so, and they knew that their pension would be frozen when they made that decision. |
This statement, roughly translated, means:
"We said we would fleece you. (But we hid it in the fine print.)"
"You knew we would fleece you. (But you found out when it was too late.)"
"We kept our promise. We did fleece you"
A noble sentiment indeed by the
Heartless Lady of Heartbreak House. |
The Government's
discriminatory policy is indefensible |