Expats protesting at the unfairness of freezing their state pensions while other pensioners pick up index-linked increases are lobbying the government to phase in changes that will give them more money.
The International Consortium of British Pensioners (ICBP), which is at the forefront of a campaign to unfreeze pensions, argues new research shows increasing state pension payments need not cost Britain as much money as first thought.
The government won a legal fight not to increase expat state pensions in line with inflation at the European courts, but the ICBP is carrying on the fight through lobbying politicians.
More than 550,000 British expat pensions around the world, but mainly in Australia, New Zealand and Canada are paid a flat rate state pension.
The amount is fixed at the amount of the first payment, so someone who retired in Canada in 1983, when the state pension was paid at £34 a week, still receives the same amount.
Payment gap
However, a British expat pensioner retiring to Europe or 16 countries, including the US, which have special state pension agreements with the UK, in 1983 is £60 a week better off thanks to cost of living increases to their pension.
The pension gap will become wider when the index-linked flat rate state pension of £144 a week is introduced in 2016.
The ICBP wants the British government to bring all expat pensions into line by ‘age tiering’.
The group explains this means phasing in the increase, starting with the oldest pensioners, which they say would cost less than the projected £655 million a year payment the government predicts.
The ICBP calculates age tiering to pay just 90 year olds the indexed pension would cost £50 million a year.
Age tiering
Further savings of around £3,800 a year are involved, the group explains, because expats do not consume any state resources, like healthcare.
“Age tiering is not expensive, offers a fair and achievable solution to this continuing problem,” said John Markham, who handles parliamentary affairs for the ICBP.
The government and the Labour Party are both looking at cutting state pension related benefits for expat pensioners, even though European courts ruled the cut as unfair after a pensioner in Switzerland complained about losing top-up.
The payment is worth between £100 and £300 a year to pensioners.
Although welfare secretary Iain Duncan Smith has vowed not to pay the benefit, Prime Minister has authorised payments to continue for the time being.
About John Cassidy
