Over 500,000 elderly British expats, about half of them Australia-based, are reeling from the shock news that the European Court of Human Rights has rejected their claim that the UK’s long-standing frozen pensions policy is discriminatory and in breach of the Human Rights Act.
The bitterly resented policy was introduced in the mid-1940s by the socialist Clement Attlee government. It penalised Britons who retired to most Commonwealth countries. Even though they had contributed to the UK’s mandatory National Insurance pension scheme, their pensions were not uprated in line with inflation Apparently this was because it was assumed that their living expenses in sun-drenched Commonwealth nations like Australia — and particularly their winter heating expenses — would not be as great as those confronted by compatriots perishing in post war Glasgow, Liverpool and other then very bleak areas of the UK.
Yet over the decades, and in spite of radically changing times in the UK, its frozen pensions policy has remained in force, or rather partly in force because it does not adversely affect its National Insurance Fund contributors who retire to most non-Commonwealth nations, including European Union countries, the United States, Israel and Turkey. They receive the same annual pension increases as contributors who remain resident in the UK.
Meantime, in line with the policy, many Commonwealth-based retirees have not had their British pensions indexed for years and in some cases, decades. And those penalised by the policy include not only Britons, but Australians, Canadians, South Africans, New Zealanders and others who spent many years of their lives working in the UK and contributing to its mandatory pension scheme.
In fact one of the 13 cases referred to the ECtHR by a consortium of Commonwealth-based pensioner lobby groups concerned an Australian, Penelope Hill, who worked in the UK and paid into its mandatory pension scheme from 1962 until 1982. In order to provide as best she could for her retirement years she continued to contribute to the UK fund following her return to Australia. Yet, in compliance with the frozen pensions policy, her British pension has not been uprated in line with cost-of-living rises since she began drawing it in 2000.
The majority of the cases mentioned at the European court, however, detailed the plight of elderly Britons who had contributed to the UK’s mandatory scheme for between 40 and 50 years and who had also served in Britain’s armed forces during WWII, As a result of the policy several of these expats have not had their UK pensions increased since, for example, 1990 when the basic weekly rate was about £46.90. It is now about £90.
Canada, Australia are among the handful of Commonwealth countries which offer financial assistance to British expats impoverished by the UK policy. The current cost to Australia is about $A110 million a year.
Had the European Court ruled in favour of the pensioners, the Australian taxpayer would have been relieved of this outlay. In addition, Australian would have benefit by an increase in the amount of revenue flowing into Australia each year by way of pension payments from the UK Department of Work and Pensions. That figure is currently about £400 million, but expat pensioner chiefs estimate it would have been increased by at least a third if the European court had ordered the defrosting of all the frozen pensions.
The minister in charge of the issue, Jenny Macklin, is expected to shortly comment on the European court’s six-to-one decision that the policy is not discriminatory. The matter was referred to the court by a consortium of expat pensioner organisations following previous unsuccessful action in the High Court in London, the Appeal Court and the House of Lords.
The action has been financed by contributions from expat pensioners. Their leaders are expected to make a statement shortly as to whether they will pursue the claim for equal pension rights in the EctHR’s court of appeal, the Grand Chamber, The pensioners have consistently claimed that they are discriminated simply because of their retirement domicile — because of they have chosen to retire to, say, Australia rather than Amsterdam, Atlanta or Alaska.
Many point out that they left the UK only because they wanted to spend their retirement years with adult emigrant children in Australia, Canada and New Zealand.
I am writing from the UK where we have returned to be with our families. We lived in Australia for almost 20 years and for 13 of those years my UK state pension was frozen at the amount it was when I first received it. Most British pensioners in Australia will have different pensions, the oldest receiving as little as £10 per week and the most recent immigrant from the UK probably receiving around £97 per week. Both will remain frozen at those amounts, both will have paid all their National Insurance dues while working, but there is no parity. This is said not to be discrimination by judges who have dismissed the recent appeal. I cannot for the life of me think what else it can be, especially as there are another 500,000 whose pensions are exactly the same as they would be if they remained in the UK and will be indexed every year for the rest of their lives. These “lucky” pensioners live in one of the many countries now making up the European Union and a motley variety of other countries including the USA. See http://www.pension-parity-uk.com for all the facts.
Boring? Yes, but does Australia really want to deal financially with problems brought about by the inconsistency of the British Government? It might be worth badgering your local MP about setting up a new agreement with the UK to avoid this. I had no idea, until I read Ava Hubble’s article, that the problem can be laid at the door of Clement Atlee! Now that is some time ago – the 1940s, for goodness’ sake! – and the European Union did not even exist then, so why have British governments, past and present, Labour, Liberal and Conservative, retained rules which date back to Atlee’s ignorance of geography, thus punishing today’s British pensioners in Australia and in other assorted Commonwealth countries. The Liberal Democrats have a bit more sense but are not very likely to win an election for a while.
Back in the UK, our pensions have returned to “normal” again and are no longer frozen.