UK Pension and 'uprating'

[beanhead]

UK government has responded to the request for increases for pensioners living abroad:

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The Government has responded to the petition you signed – “Give U.K. pensioners living abroad increases with parity as those in the U.K.”.

Government responded:

There are no plans to change the policy. The Government continues to up-rate the State Pension where there is a legal requirement to do so.

The UK Government has no plans to change the current arrangements for payment of UK State Pension overseas.

The United Kingdom’s state pension system is primarily designed for the benefit of those who are resident in the UK. It is, however, payable worldwide and is uprated in the UK and also in countries abroad where there is a legal requirement to do so. This is a longstanding policy and has been implemented by successive Governments of all political persuasions for over 70 years. The policy has been the subject of Parliamentary debates over time and has been approved by Parliament and the Courts.

The rate of National Insurance contributions paid has never earned entitlement to the uprating of pensions payable abroad. This reflects the fact that the UK scheme is primarily designed for those living in the UK. The National Insurance scheme operates on a “pay-as-you-go” basis. Contributions paid into the National Insurance Fund in any year finance contributory benefit expenditure in the same year. A person’s contributions provide a foundation for calculating their future benefit entitlement but do not actually pay for those benefits.

UK expenditure on health care costs depends on where the UK pensioner settles. While the location may be decided by the pensioner, individual countries have their own immigration policies in relation to older economically inactive people. Paying uprating to UK pension recipients in countries where it is not currently paid would mean an immediate increase in costs.

There are now around 1.2 million UK State Pension recipients who are overseas residents and around 0.5 million of them do not receive increases. It would cost over £0.6bn extra a year to up-rate these pensions fully, that is to pay the pension at the rate that would be applicable if the pensioner had lived in the UK throughout. Paying future increases only would cost tens of millions in the short term but would lead to the cost of full uprating (£0.6bn) in the longer term as older pensioners died and new pensioners became entitled to fully up-rated state pensions.

Cost has always been a factor in deciding whether pension increases should be paid in overseas countries and successive governments have taken the view that it would be unfair to impose an additional burden on contributors and taxpayers in the UK to fund increased pensions for those who have chosen to live abroad. The Government concurs with that position. Ultimately, there is a choice for the individual to make where to live, and what the consequences are should that choice be somewhere other than the UK. The rules on uprating the State Pension are clear and well publicised. So the choice to migrate or not remains a choice for the individual. UK State Pensions paid to people living outside the UK also go to people who migrated for economic or other reasons well before they reached pension age.

Department for Work and Pensions

Click this link to view the response online:

https://petition.parliament.uk/petition ... sponse=yes

The Petitions Committee will take a look at this petition and its response. They can press the government for action and gather evidence. If this petition reaches 100,000 signatures, the Committee will consider it for a debate.

The Committee is made up of 11 MPs, from political parties in government and in opposition. It is entirely independent of the Government. Find out more about the Committee: https://petition.parliament.uk/help#petitions-committee

Thanks,
The Petitions team
UK Government and Parliament

[adamu]

It would cost over £0.6bn extra a year to up-rate these pensions fully

That's about the same amount as fraudulent contracts issued for supplies of PPE during the pandemic.

If there were fewer deals for minister's mates and more focus on genuine value, we might be in a better situation.

Probably been reading too much Private Eye...

[jane doe]

It completely fails to address the question of why a pensioner who is one of the lucky 700,000 who lives in one country will get an uprated pension, while one of the 500,000 living in another set of countries won't. Why are pensions in some countries uprated and others, not?
Imagine justifying other discriminatory laws. by saying 'we've done it this way for 70 years.' Making homosexual sex illegal, gender discrimination ..., no right to vote if you've been out of the country for more than 15 years (I think they're due to repeal that one, aren't they, showing things can be changed)?
Also, the number of UK citizens migrating long term must be increasing over the years.
Imagine if we all went back and started using the NHS for free. What would the cost of that be?

So, some pretty threadbare arguments.

Btw, Does anyone know if UK citizens resident in the EU are also getting their pensions frozen now?

[Bubblegun]

It completely fails to address the question of why a pensioner who is one of the lucky 700,000 who lives in one country will get an uprated pension, while one of the 500,000 living in another set of countries won't. Why are pensions in some countries uprated and others, not?
Imagine justifying other discriminatory laws. by saying 'we've done it this way for 70 years.' Making homosexual sex illegal, gender discrimination ..., no right to vote if you've been out of the country for more than 15 years (I think they're due to repeal that one, aren't they, showing things can be changed)?
Also, the number of UK citizens migrating long term must be increasing over the years.
Imagine if we all went back and started using the NHS for free. What would the cost of that be?

So, some pretty threadbare arguments.

Btw, Does anyone know if UK citizens resident in the EU are also getting their pensions frozen now?

There is probably a mutual agreement between the Uk and that other country.
Sadly when it comes to money, discrimination seems to be ok.
You can do the same job as anyone else and get payed less just because your younger in the UK. Pitty they don't realize not all young people live with mum and dad, and the electricity/gas/phone isn't any cheaper.
The EU and UK still maintain pension raises.

The triple lock was dumped last year, and strangely enough I expect it to be dumped this year if inflation continues on it current flight trajectory.

[Deep Blue]

It completely fails to address the question of why a pensioner who is one of the lucky 700,000 who lives in one country will get an uprated pension, while one of the 500,000 living in another set of countries won't. Why are pensions in some countries uprated and others, not?
Imagine justifying other discriminatory laws. by saying 'we've done it this way for 70 years.' Making homosexual sex illegal, gender discrimination ..., no right to vote if you've been out of the country for more than 15 years (I think they're due to repeal that one, aren't they, showing things can be changed)?
Also, the number of UK citizens migrating long term must be increasing over the years.
Imagine if we all went back and started using the NHS for free. What would the cost of that be?

So, some pretty threadbare arguments.

Btw, Does anyone know if UK citizens resident in the EU are also getting their pensions frozen now?

Us non-resident Brits get to make our National Insurance payments at farcially low rates.

I woudn't be complaining about reforming the system as I suspect that would be one of the first things to go.

[Bubblegun]

It completely fails to address the question of why a pensioner who is one of the lucky 700,000 who lives in one country will get an uprated pension, while one of the 500,000 living in another set of countries won't. Why are pensions in some countries uprated and others, not?
Imagine justifying other discriminatory laws. by saying 'we've done it this way for 70 years.' Making homosexual sex illegal, gender discrimination ..., no right to vote if you've been out of the country for more than 15 years (I think they're due to repeal that one, aren't they, showing things can be changed)?
Also, the number of UK citizens migrating long term must be increasing over the years.
Imagine if we all went back and started using the NHS for free. What would the cost of that be?

So, some pretty threadbare arguments.

Btw, Does anyone know if UK citizens resident in the EU are also getting their pensions frozen now?

Us non-resident Brits get to make our National Insurance payments at farcially low rates.

I woudn't be complaining about reforming the system as I suspect that would be one of the first things to go.

I was the same. I guess some people want their cake and eat it. wanted to pay ultra cheap rate and the rises.
I guess you could put the NI you would have payed in the UK into the TNISA or IDECO.

[Roger Van Zant]

I am really cautious of "rocking the boat" on this issue!
If people kick up too much of a fuss, the UK government will just say, "Right! Sod it, no more Class 2 NIs for Brits resident in Japan from now on!".
They would be completely within their rights to do this.

I would hate to lose Class 2 NIs, as I am sure many others would.
Inflation in Japan is almost nothing, so even if there is no "uprating" the pension once you start drawing it, it isn't as much of an issue as it would be in a country with normal inflation.

[beanhead]

I am really cautious of "rocking the boat" on this issue!
If people kick up too much of a fuss, the UK government will just say, "Right! Sod it, no more Class 2 NIs for Brits resident in Japan from now on!".
They would be completely within their rights to do this.

I would hate to lose Class 2 NIs, as I am sure many others would.
Inflation in Japan is almost nothing, so even if there is no "uprating" the pension once you start drawing it, it isn't as much of an issue as it would be in a country with normal inflation.

Agreed. It is nothing for us to complain about.

The only caveat is that of course we don't know what will happen with inflation in Japan over the next 2,3,4 decades. Japan could also 'suffer' from normal inflation.

[imaginatorium]

Just to mention that there are some of us (I may not be the only one) who made honest NI contributions while working in the UK. When I came here 30something years ago I had no idea I could make supercheap contributions, and I'm not sure I would have thought it a very good idea, since it involves contributing to something you have absolutely no representation in, which can be changed capriciously.

I would think that ending the cheap (i.e. basically unfair) contributions was an excellent idea, and could well be combined with restoring the pension of the honest contributors.

As for inflation, I despair. Innumeracy is all the rage. Stupid has won. (Look, inflation in Japan has absolutely nothing to do with it. Inflation in the UK is precisely what changes the real value of a fixed-sterling-amount pension. So current talk of 10% inflation means I lose 9% of my pension.)

[Beaglehound]

Just to mention that there are some of us (I may not be the only one) who made honest NI contributions while working in the UK. When I came here 30something years ago I had no idea I could make supercheap contributions, and I'm not sure I would have thought it a very good idea, since it involves contributing to something you have absolutely no representation in, which can be changed capriciously.

I would think that ending the cheap (i.e. basically unfair) contributions was an excellent idea, and could well be combined with restoring the pension of the honest contributors.

As for inflation, I despair. Innumeracy is all the rage. Stupid has won. (Look, inflation in Japan has absolutely nothing to do with it. Inflation in the UK is precisely what changes the real value of a fixed-sterling-amount pension. So current talk of 10% inflation means I lose 9% of my pension.)

I think ‘honest’ is an extremely poor choice of word here. Granted the Class 2 contributions are an anomaly which results in extremely cheap entitlement, but folk are simply following the rules. Further, those living in the U.K. have the right to pay class 3 voluntary contributions at the exact same rate. And, by definition, anyone paying class 2s will have worked in the U.K. at some point in the past.

I don’t follow your inflation argument. For those of us living in Japan, high U.K. inflation will likely boost our state pension payout as U.K. pension payouts will more than likely go up by more than inflation in Japan.