Thinking of moving abroad when you retire?
There are many reasons why you might want to move abroad when you retire. It might be to join your children who have emigrated or you may have come to the UK and spent much of your working life here and want to move back home. Or you just might feel after all these years of working you deserve a change.
You have some savings and of course there is the state pension that you are entitled to, since you have worked and paid the required National Insurance contributions. And here is where it can all start to go wrong.
As long as you move to the EU or one of sixteen other designated countries then all will be fine. However move to anywhere else in the world and you will find that your basic state pension will remain frozen at the same rate as when you leave the country.
So whilst other pensioners in the UK, the EU and the other sixteen countries all receive the maximum of the increase in earnings, inflation as measured by the Consumer Price Index or 2.5 per cent; in ten, twenty or thirty years time you will be receiving exactly the same amount as you received when you first moved abroad.
There are 1.1Million UK pensioners living abroad and 540,000 of these live in the 156 countries where they are not entitled to receive any increase in their basic state pension. They are represented by an organisation called the International Consortium of British Pensioners (ICBP). Who have gone to great lengths to get this absurd and unfair situation put right.
They also point out that this rule discourages and prevents people from moving abroad and that by rectifying the situation the Government may well actually save money through the reduction in health care and other benefit costs. This is an area they are currently working on and if you are a pensioner you can help them by completing their questionnaire by following this link. www.surveymonkey.com/s/frozenpensions
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As the UK State Pension Scheme is nothing but a giant Ponzi Scheme funded by the majority who contribute by living within the EU, UK.
Then it is only right that once you leave the EU, UK then all benefits should be frozen. After all you don't pay any more Taxes etc to the Exchequer, then why should the Exchequer pay you any more.
Sorry
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The UK State Pension scheme is certainly not a giant Ponzi scheme. Far from it. Indeed, if anything it is a “reverse Ponzi Scheme”.
Everyone is entitled to their state pension based on the number of contributory years into the National Insurance Fund (NIF). The NIF receives all NI contributions and it is used to pay out for all the state pensions entitlement. Around £70 billion flows into and out of the NIF each year.
The NIF currently has a surplus balance in it of over £45 billion. You do not have to believe me, just look at the HMRC website which publishes the annual accounts of the NIF (at page 14):
http://www.hmrc.gov.uk/about/ni-fund-ac-gb-0809…
The National Audit Office (NAO) audits these accounts each year and attests to the completeness and accuracy in the annual report.
The Government Actuary Department (GAD) is required each year to publish a report for Parliament on the affordability of the annual state pension increase. Here is the latest report available:
http://www.gad.gov.uk/Documents/Social%20Securi…
You will note that the balance of the NIF surplus balance is shown as over £50 billion as at 31 March 2010 and as similar surplus balance forecast for 31 March 2011 (page 9). Indeed the GAD forecasts that the NIF surplus balance will be just short of £95 billion by 2014/15 (page 32).
I have obtained responses from the Debt Management Office (part of the Commissioners for the Reduction of the National Debt) where the surplus balance is invested in Call Notice Deposits, showing the amount of the investment with them is currently (at at 30 June 2010) over £45 billion.
So we have evidence from four separate government departments all showing that there is a huge surplus in the National Insurance Fund of over £45 billion.
Half a million pensioners living overseas do have their state pensions uprated each year, as you rightly say, in the UK and EU but you fail to mention that there are a number of other countries where the state pension is uprated including the USA, Switzerland, Israel, Turkey, the countries of the former Yugoslavia, the Philippines, Jamaica, Bermuda, Barbados, US Virgin Islands, Sark, Guernsey, Jersey, Alderney, and several others. See:
http://www.seniorsnetwork.co.uk/expatpensioners…
Half a million other pensioners living in mainly Commonwealth countries have their state pensions frozen at the rate at which they are first paid or as at the date of migration and these countries include Australia, Canada, New Zealand, South Africa, India, Pakistan, Sri Lanka, Bangladesh, Malaysia and the remaining countries in the Caribbean and many more countries with low British state pensioner populations. See:
http://www.seniorsnetwork.co.uk/expatpensioners…
Indeed there are still some people who live overseas on frozen British state pensions who still do pay UK taxes, for example, those people living in countries that do not have a Double Tax Agreement with the UK, one example is Thailand, as well as thousands of British pensioners who live in Australia on temporary residents visas.
You may happen to live in an uprated country so you have an uprated pension but please do not criticise those people who are fighting simply for fairness, equality and justice.
After all, everyone has paid into the NIF under the same rules to qualify for their state pension but the rules change when it comes to paying out the state pension. It is just that some pensioners are less equal than others.
Peter Morris
President
BAPA
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Can lupulco explain why UK pensioners living in the USA have their state pensions indexed each year? After all they don't pay any more Taxes etc to the Exchequer.
The vast majority of frozen pensioners live in the old loyal Commonwealth countries.
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Rainbowfarmau, surely the USA is an old empire country?
The reason for this problem is that some countries have an Social Security agreement with the UK. Australia used to have one with the UK but withdrew. That is why the UK state pension is no longer increased annually in Australia. Those that still have an agreement in force still pay the increases; those who have no agreement do not.
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Tim – I am afraid you have the story the wrong way around. Australia did have a Social Security Reciprocal Agreement with the UK for many years but it did not include pension uprating from the UK side – Australia did and still does uprate Australian pensions for people living in the UK. This meant that over time, through the SSRA, frozen British pensioners were being more and more supported by the Australian taxpayer through greater and greater reliance on Australian top up pensions. In 2001 Australia said “enough is enough” and after 12 months warning to the UK terminated the SSRA. So the termination of the agreement was as a result of the frozen pensions issue and not the cause of it, The so-called reciprocal agreement was a very one side affair. See more at:
http://www.britishpensions.org.au and
http://www.pension-parity-uk.com
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Tim you are wrong on at least two counts. One has been explained to you by Peter Morris in his reply. Many MPs, including even ministers, are not aware of the history of the agreement.
The other is that USA is an old DISloyal empire country. Left the empire in 1776, and in both world wars was a very late entrant in support of Britain's fight for its life.
BTW your final sentence seems to imply that the increases are paid by the country of residence. Maybe not what you meant, but certainly the natural meaning of your remark.
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rainbowfarmau, I was just trying to help with an answer to your question, since no one lese had responded! I wish now I had not bothered.
It is quite pointless and rather immature to quote someone called or calling themselves “Peter Morris” as some sort of recognised world authority on these or other matters, without qualifying why this person is the fount of all knowledge? Who is it that automatically the opinion they state here is bound to be correct, whereas what I have stated to you is automatically incorrect.? I would suggest that you need to validate your data sources adequately before you comment in that vein here.
Point 1: The USA used to be part of the British empire. I did not make any statement as to how they ceased to be part of that empire, nor is it of any significance whatever to the point you made. You were originally askiing why UK pensioners in the USA had their pensions indexed each year, and I had explained that this was because the USA has a reciprocal Social Security agreement with the UK.
Point 2: I was informed by the DWP some while ago that there used to be a reciprocal Social Security agreement between Australia and the UK; It was ceased by Australia some years ago. (I did not state which year). They also stated to me that some years ago UK pensioners did receive the annual increases in Australia for a while, and that in some cases the pensions to UK pensioners living abroad are paid under a reciprocal agreement with the pension and annual increase in the local currency. I did not state any data concerning the history of the agreement with Australia. So it is a fact that in at least some countries where there is a reciprocal Social Security agreement the pension and any increases are paid in local currency.
So for you to state as you have done that I was wrong on at least two counts is incorrect, and is actually insulting! You clearly did not read properly what I had posted in my comment, and allowed your mind to run riot as a result of what the self-styled expert, whom for some reason you automatically acknowledge as the fount of all wisdom, had commented here.
As another example, nowhere within the two links which your idol posts here is there any mention of what he claims is thereon! There is no history relating to why the Australians ended the agreement with the UK, nor that the reason for the end of this agreement was the UK freezing the pensions of those living in Australia..
So, I regret having tried to be of any assistance to you. Given two sources of data, (the DWP and an unacknowledged “Peter Morris” of no significant stated or qualified repute), I know which one I would tend to believe! I did not have any story the wrong way around.
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I think it only fair that the pension pot reflect what was promised to the people who have contributed. It would seem the freeze would constitute a breach in contract or trust. The risk management on the health of the funds or stock investment themselves carried out by the various government departments managing the state pension was and is a shameful stain on successive governments.
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Tim. I was involved in the discussions with the Australian minister and her department when the decision was made to terminate the agreement. I know that it was because the agreement as it was then did not say that the state pensions of people living in Australia would be indexed each year. I am often in touch with the relevant department in Australia – DFACS – and know the history of the whole thing. How Senator Jocelyn Newman in the mid 1990s tried to negotiate with the DSS (as DWP used to be called). She suggested various means of easing in the abolition of freezing over a period of years, but met with stonewall refusal at all points. Rumour has it that she stomped out of the meeting red-faced.
Since then I have met with two of her successors in face to face meetings, Kay Patterson and the current minister Jenny Macklin. Jenny has written to one of my colleagues saying that she has been in touch with the relevant ministers in UK both before and after the recent election trying to have a new agreement that does provide for annual indexation.
Some time ago the Tories had a boiler-plate letter saying that freezing was extended to Australia when the agreement was terminated – the same furphy as you are putting forward. I replied to one of these letters – well actually to more than one – and at last someone looked into it and agreed I was right. he then had the standard letter changed. It is now admitted that Australia terminated the agreement because it did not provide for proper indexation.
It is not true that British pensioners living in Australia did at one time receive the annual pension increases. Whoever in DWP says so is just plain wrong. The only ones who might would be people who were here for a short stay, or people who had their pensions paid to a UK bank and did not tell DWP that they were now Australian residents.
There are people living in Australia on 10-year visas who have their pensions frozen even though they still have to pay UK tax. I know this is true because I am in regular touch with them.
At about the time that Jocelyn Newman was having fruitless discussions in London there was an enquiry by the Social Security Committee in London. This was in 1996, and unfortunately before they started putting their reports on the Internet. But you could purchase a copy from HMSO or whatever they call themselves. They recommended that there should be a free discussion and vote in the commons on the proposition that pension freezing be abolished. the government refused to do so. This was in1996-97. Australia terminated the agreement in 2001, so you can see which came first.
Tim, I do know what I am talking about.
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Truth is that the UK pension is pretty awful, no matter where you live. The only people who could change this are the politicians. As it is, they do not get their pensions from a seperate pot. So their final salary schemes come from the same pot as the state pensioners. They do not want to run this pot down as people may ask why they are not paid from their own stand alone pension scheme as other workers, instead of hiding their genrous pensions in the state pot. So they dont want to permit any increases in costs to this pot. Politicians, bankers etc. move overseas when they retire. They sell up and go to countries with lower cost of living. Unfortuneatly, many workers cant afford this option. I think that unlike Bliar, politicians should have to retire in the UK to collect their pensions. Maybe this would eliminate the running away option and push them into making the UK a better place to retire in. I note that bankers couldnt really care less about the taxes on bonuses. The gross bonus is added to their final years salary and hence is included in their final salary pensions. They will kill their pension schemes as they will collect way above what they contributed. Pensions should be based on whole life earnings. Not what you can defer to your final year or what you can scam into your final year. This is a big issue with senior civil servants and senior employees. They have a neat built in scam that the public doesnt seem to recognize. But it is their pensions that will suffer.
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