The 13 retired expats who were fighting to have their pensions unfrozen have lost their final case in a European court.
This now means that over 500,000 UK pensioners currently living abroad will not see an increase in their pensions in-line with inflation. Pensioners affected by this ruling are those who now live in countries such as Canada and Australia, countries with no UK reciprocal agreement. They will now be limited to only the amount they were first granted on retirement, in some cases just £6 a week.
The ruling means that the government will save upwards of £500m a year, with the government claiming that the money is more of a priority for pensioners who still live in the UK.
However the ruling will certainly come as a big disappointment for pensioners such as Canada-based John Markham, he told the BBC: “There is an image of people living well in the sunshine - but there are plenty of cases of real hardship.”
The decision comes after numerous other negative verdicts in the other courts and is pretty much the final say on the matter, although they may still take the case to the Court of Public Opinion. The decision was applauded by the Department for Work and Pensions: “We note that the court has found in favour of the government. We do not therefore plan to make any changes to the current arrangements, which allow for the exportability and up rating of UK state pensions. We will, nonetheless, study the terms of the judgment carefully to ensure that we continue to comply with our obligations under the terms of the European Convention on Human Rights,” a spokesman said.
The case was spearheaded by a South Africa based expat named Annette Carson, who left the UK in 1990 but still made contributions to her UK pension. Despite this, her pension income was frozen, which prompted her to take legal action. Unfortunately the European Court of Human Rights decreed that there was no direct link between national insurance contributions and pensions. In a statement the court said: “As non-residents, the applicants did not contribute to the UK economy, in particular, they paid no UK tax to offset the cost of any increase in the pension”.
The ruling has also led to outcry from OAP support groups. A representative from Help the Aged and Age Concern, Michelle Mitchell, said: “This ruling is bad news for half a million pensioners whose only fault is to retire to the 'wrong' country in the international 'postcode lottery' of pensions up-rating.”
People who are in retirement, approaching retirement, are expats or are thinking of becoming expats should be aware that there are more options available than simply opting for a state pension. Visit our offshore pensions section for more information.