Frozen State Pension news: thousands of expat retirees struggling

24 December 2024

Thousands of retired UK pensioners living overseas receive an average of just £3,000 from a "frozen State Pension”, despite paying into the system for decades. 

Unlike those who remain in the UK or retire to certain qualifying countries, these Britons see their State Pensions locked at the level they were when they left the country. They haven’t benefited from annual increases to account for inflation.

This policy affects over 450,000 retirees, many of whom are veterans, former public servants, or other long-time contributors to the UK tax system. The financial impact is severe, with some pensioners receiving as little as £3,000 a year – that’s £7,000 less than what retirees in the UK typically receive.

Why are pensions frozen?

The UK only uprates State Pensions annually in countries where it has reciprocal agreements or arrangements to do so. These agreements exist with countries such as the United States, the European Union, Gibraltar and Turkey. 

However, no such agreements are in place for many Commonwealth nations, including Canada, Australia, India and South Africa. According to data from the Department for Work and Pensions (DWP), more than 40% of the 1.12 million pensioners living overseas are receiving frozen State Pensions.

For example, a retiree who moved to Australia in 2000 whilst claiming the old Basic State Pension of £67.50 a week would still be receiving that amount today, despite inflation eroding its value. By contrast, if they had remained in the UK or moved to an eligible country, they would now be receiving £169.50 per week—the full Basic State Pension for the 2024–25 tax year.

The impact on retirees

The frozen State Pension policy disproportionately affects older pensioners, many of whom retired decades ago and now struggle to afford basic living costs. For some, the difference between the frozen rate and the current rate is life-changing.

Many pensioners choose to emigrate to be closer to family or for health reasons, only to find themselves caught off guard by the financial implications. The policy has sparked frustration and disappointment, especially among veterans and public servants who feel the government has failed them.

If you’ve been following the frozen State Pension news and updates, one high-profile case you may have seen is that of 99-year-old Anne Puckridge, a Second World War veteran now living in Canada. According to an article by the Independent, Mrs. Puckridge paid taxes and National Insurance in the UK for decades but receives just £72.50 per week. That is far less than the £169.50 she would be entitled to if she had stayed in Britain.

Mrs Puckridge recently travelled over 4,000 miles to deliver a petition to Downing Street signed by over 133,000 supporters, calling on the government to address the issue. Despite meeting Pensions Minister Emma Reynolds, she said she was “heartbroken” to have not met prime minister Sir Keir Starmer to discuss the matter directly with him.

“Whilst I was appreciative of the minister’s time, it was bitterly disappointing to hear no sign of intent to move past the same old platitudes that this policy remains too hard and too expensive to fix,” she said.

Her story highlights the broader challenges faced by thousands of pensioners in similar situations, many of whom could now feel abandoned by the country they once served.

Campaigns for change

Groups such as the International Consortium of British Pensioners have long pushed for reform, arguing that uprating pensions globally would cost the UK government just £307 million over five years – a fraction of the pension budget.

However, the Department for Work and Pensions actually estimates the cost of ending the frozen pensions policy as £4.59 billion over five years. According to MoneyWeek, this is based on the DWP having to backdate payments where all pensioners who currently receive a frozen state pension would start receiving a pension as if it had never been frozen.

Celebrities have also joined the campaign to help make frozen State Pension news worthy. Dame Joanna Lumley, an actress and activist, has lent her voice to the cause, calling the policy “cruel” and urging the government to act. 

“Times may be tough and challenging,” she said, “but many of those affected by this policy served Britain through even tougher times. They did right by the country, so surely the country should now do right by them.”

Government representatives comment on campaign

Reported in MoneyWeek, a government spokesperson from the Department for Work and Pensions said:

“We understand that people move abroad for many reasons, and we provide clear information on gov.uk about how this can impact their finances in retirement. The International Pension Centre is a source of advice for people who are already retired.

“The government’s policy on the uprating of the UK state pension for recipients living overseas is a longstanding one of more than 70 years and we continue to uprate state pensions overseas where there is a legal requirement to do so.”

For those considering retiring abroad, understanding the implications of the frozen pension policy is essential. Countries like New Zealand, Australia and all African countries remain part of the frozen list, while others, including the US, Turkey, and EU nations, offer uprated pensions. Checking the rules and keeping an eye on the latest frozen State Pension news before moving can help prevent financial shocks in retirement.

Sources:

Over 450,000 retired UK pensioners living overseas receiving frozen State Pensions: Frozen state pensions: thousands of expats receive just £3,000 a year. Money Week. Accessed 16 December 2024.

Veteran travelled over 4,000 miles to deliver a petition to Downing Street signed by over 133,000 supporters: Veteran, 99, ‘disappointed’ PM would not meet her to discuss pensions freeze: The Independent. Accessed 16 December 2024.