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On Line Petition |
This was the petition
http://petitions.pm.gov.uk/unfreezepensions/
We did not expect that the petition would make much difference with the government, but the explanation that goes with it will inform your friends.
Also get them to have a look at The facts file
The Petition
Government Response
BAPA Reply
"We the undersigned petition the Prime Minister to remove the discrimination against British State pensioners who retire in certain overseas countries."
"British State pensions are uprated in the following overseas countries: Austria, Barbados, Belgium, Bermuda, Cyprus, Czech Republic, Estonia, Finland, France, Germany, Gibraltar, Guernsey, Hungary, Iceland, Ireland, Isle of Man, Israel, Italy, Jamaica, Jersey, Latvia, Lithuania, Luxembourg, Macedonia, Malta, Mauritius, Norway, Philippines, Poland, Portugal, Sark, Slovakia, Slovenia, Spain, Sweden, Switzerland, The Netherlands, Turkey, USA and Yugoslavia. British State pensions are frozen in these countries: India, Pakistan, Bangladesh, Malaysia, Australia, Canada, New Zealand, South Africa, Zimbabwe and most other Commonwealth countries. British State pensions are paid out of the National Insurance Contribution fund which, the Government's own Actuary Department stated in early 2006, has a surplus exceeding current requirements of over £30 billion and growing."
The Government response was more or less predictable.
Thank you for your e-petition about the annual uprating of State Pensions payable to British pensioners residing abroad.
As the petition correctly points out, State Pensions are paid out of the National Insurance Fund (NIF) rather than general taxation. The petition argues that the Government should use the current surplus in the Fund to meet the cost of uprating the State Pensions of all recipients living overseas.
The NIF is maintained under the control and management of Her Majesty's Revenue and Customs. It is run on a "pay-as-you-go" basis; current income, mainly from national insurance contributions, pays for current expenditure mostly on Contributory Benefits. There is a requirement for the NIF to have sufficient funds, together with a working balance, to meet benefits expenditure. The uses to which the NIF can be put are clearly specified in legislation, with the majority spent on state pensions.
National insurance contributions and the associated social security benefits operate within the Government's fiscal rules designed to ensure sound public finances. When there is a surplus it is invested. Without this the Government would need to raise the equivalent through other means to fund public services. The NIF surplus is not therefore an extra resource available to spend.
To fund annual pension increases for all recipients in countries where upratings are not currently payable, we would have to raise additional income from UK taxpayers. Our priority, given the limited resources available, is to ensure that pensioners resident in the UK continue to see an increase in their living standards commensurate with the growth of the economy as a whole.
And here is BAPA's riposte to the government response, written by two of our experienced campaigners, Brian Havard and James Nelson
‘The petition argues that the Government should use the current surplus in the Fund to meet the cost of uprating the State Pensions of all recipients living overseas.’
The petition does not specify how the cost of uprating the State pensions of all recipients living overseas should be met. Pensions for slightly over half of the non-resident pensioner population are indexed, with the uprating being paid from the NIF.
The cost of uprating the currently frozen expatriate state pensioners would not make a significant inroad into the National Insurance Fund surplus. In fact the uprating cost, which the Government assesses at ₤420 million p.a., is well within the annual surplus arising from the operation of the fund, and is a tiny fraction of the current NIF balance of some ₤40 Billion, forecast to double over the next five years. That balance is invested in Government paper currently attracting interest for the NIF of some ₤1.5 Billion p.a., more than four times the cost of uprating.
‘It [the NIF] is run on a "pay-as-you-go" basis; current income, mainly from national insurance contributions, pays for current expenditure mostly on Contributory Benefits.’
This is irrelevant. The manner of funding pensions does not affect pensioners’ rights to the benefits secured by their own contributions.
As a result of setting the contribution rates at a level far in excess of what is needed, current income exceeds current expenditure by a considerable margin. In 2005/6 the excess was ₤5 Billion which goes to swell the NIF balance used to purchase Government scrip. The Treasury then uses the proceeds - freed by this artifice from the restrictions imposed by legislation on the manner in which NIF funds may be disbursed - for investment in capital projects. It is stealth tax on workers and their employers.
‘When there is a surplus it is invested. Without this the Government would need to raise the equivalent through other means to fund public services. The NIF surplus is not therefore an extra resource available to spend…..To fund annual pension increases for all recipients in countries where upratings are not currently payable, we would have to raise additional income from UK taxpayers.’
This argument carries weight neither in logic nor fact. A recent tender for the sale of UK Government bonds was heavily oversubscribed. The relatively tiny amount needed to pay the uprating could be raised immediately on market; it would not even cause a ripple in Treasury accounts. The ludicrous threat of having to raise taxes should not frighten even the most gullible.
‘Our priority, given the limited resources available, is to ensure that pensioners resident in the UK continue to see an increase in their living standards commensurate with the growth of the economy as a whole.’
What is here portrayed as a socially responsible policy ignores morality and fact:
- more than half the expatriate pensioners are paid fully uprated pensions; why should the remaining expatriates be victimised?
- the whole basis of the UK state pension as applied to 96% of pensioners including half the expatriates is that pensions are proportionate to contributions. Altering the rules to permit confiscation of uprating entitlement based on country of residence is a breach of the Government’s fiduciary responsibility as trustees of the state scheme.
CONCLUSION
The Government’s disdainful response is an affront to both morality and reason.