frozen UK pensions

[Moneymatters]

My suggestion is RJ opens a lodge/retreat/campus/compound

I think the biggest challenge for me would be finding someone qualified to sign..

a care or residential home manager (if customer is resident)

Sorted

OK. It's basically a prophecy at this point.

[RetireJapan]

My suggestion is RJ opens a lodge/retreat/campus/compound* over there and offers a concierge scheme that handles all insurance, HMRC and immigration paperwork both sides. Paid for with a percentage of the increase so no initial outlay to us...

* That list just kept getting increasingly cult adjacent but I'm standing by it.

Special drinks for people who get a bit too old?

After we've changed your will to leave everything to the compound, of course.

(don't drink the pink lemonade...)

[Wales4rugbyWC23]

So realistically, us Brit Japanese lifers should look to stay in the Philippines for six months from April the 5th, maybe in our 70s because by that time the pension freeze would have thawed away at our UK state pension value. Hopefully avoiding the ever increasing number of typhoons hitting there, at the same time.

That would suit me just fine, as long as I'm fit to travel and the deal is still on. It would be cheaper than staying in the UK for six months, and probably a lot more pleasant. But I wonder how much travel and/or health insurance would cost for such a long trip? And such a strategy would make it difficult for us to have pets when we're older.

I am reposting this from the facebook page of British expats in Japan, about getting your UK state pension unfrozen if you go and stay in the Phillipines for six months or for that matter going back to the UK/EU.

I couldn’t find any DWP official guidance on this which specifically outlines, that “visiting” unfreezes the pension. In the context of the Philippines, I checked the social security agreement, between UK and Philippines (https://www.legislation.gov.uk/uksi/1989/2002) which outlines in Article 3, that one must reside in either party (UK or the Philippines) in order for the social security agreement to apply. And Article 4(2) outlines the increases in line with triple lock.
So I called the DWP to question this, because it spiked my interest, and I really wanted to know. it seems illogical to me that the pension can be unfrozen when just “visiting” (but certainly not complaining if it does ) but yet these media outlets were saying it does, but without providing or referencing actual official DWP guidance
Here are my findings:
- To my disbelief, visiting the UK or EU does enable one to unfreeze their state pension. But ONLY for the duration of the visit. Once you leave UK/EU, the pension annuity is then readjusted back to what it was once it was frozen (basically goes back to the amount it was when you reached pension age, or moved to Japan… which ever came last). So for example imagine your pension is frozen at £20,000 per year, but you visit UK/EU when the UK state pension is worth £30,000 per year. The time youre visiting UK/EU, you can get the £30,000 per year rate. Then once you end your visit in UK/EU, the pension annuity drops back to your frozen £20,000 rate.
- This only applies to visits to the UK/EU. Not any other reciprocal country, such as the Philippines. I probed this question to ask why, UK/EU, but not other agreement countries? as in UK I can understand, as it’s the source of the pension income, but why EU, and not the Philippines, USA, other country with agreement? Especially as post brexit, EU (apart from Ireland) should be no different in classification to the other agreement countries. Which they could not give a solid answer. And even said their system does not allow them to input other countries apart from UK/EU for unfreeze visiting. My guess would be that information sharing between UK and EU is still robust, as in it would be easier for DWP to check immigration records for UK/EU, to check if someone is falsely claiming they are still visiting UK/EU, to get unfrozen rates, when in reality they left months ago. Whereas for the Philippines, as an example, that level of immigration access would be difficult, or not even possible for DWP to access.
Meaning my assessment of the social security agreement between UK and Philippines is correct, in that you’d need to be a resident of the Philippines, in order to unfreeze your UK pension. However, my understanding of residency being required for UK/EU was incorrect.
Summary: based on current rules, visiting UK/EU will enable you to unfreeze your UK state pension, but only for the duration of the visit. Once you leave UK/EU, it goes back to frozen rate. Visiting the Philippines (and other reciprocal agreement countries) will not result in the same unfrozen status, and instead you will need to prove you reside in those countries (which means having correct visas/right of abode, resident certificates, enrollment in their social systems etc) in order to utilize the social security agreement to unfreeze the UK pension.

[kuma]

I am reposting this from the facebook page of British expats in Japan, about getting your UK state pension unfrozen if you go and stay in the Phillipines for six months or for that matter going back to the UK/EU.
...

Interesting! Thanks for posting.

Albeit direct conversation from the DWP has occured in both this case and in the video Stuart posted, private conversation cannot replace publicly published rules, and cannot be seen as 100% reliable, through no fault of any of the correspondents. If only the International Pension Centre would publish clear rules and processes...

Fantastic detective work by our friends in the Philippines. However, I am not sure about the following conclusion:

outlines in Article 3, that one must reside in either party (UK or the Philippines) in order for the social security agreement to apply

I'm not 100% sure this is correct. I think Article 3 is about reciprocity and non-discrimination for those subject to the legislation of one country (UK or Philippines) who then become resident in the other country. Someone subject to UK legislation re pensions who moves to the Philippines should be subject to the same Filipino legislation as Filipino nationals (and vice versa), subject to any special provisions from the convention. However... in my opinion it is not as cleanly or clearly worded as most introductions to bilateral conventions.
https://www.legislation.gov.uk/uksi/1989/2002

Looking further into the legilsation:

Article 4.1

Subject to the provisions of paragraph (2) of this Article, a person who would be entitled to receive an old age pension, survivor's benefit, or an industrial disablement pension under the legislation of one Party if he were in the territory of that Party shall be entitled to receive that pension or benefit while he is in the territory of the other Party, as if he were in the territory of the former Party.

In other words, if a person is in the Philippines but is entitled to a UK state pension, he would receive it as if he were in the UK (ie uprated!).

Article 4.2 provides further clarification regarding uprating:

A person who is entitled to receive an old age pension or survivor's benefit under the legislation of the United Kingdom and who would be entitled to an increase in the rate of that pension or benefit if he were in the territory of that Party shall, after the date of coming into force of this Convention, be entitled to receive any such increase prescribed on or after that date by that legislation, if he is in the territory of the Philippines, but nothing in this paragraph shall confer entitlement to receive any such increases prescribed before that date by that legislation.

The wording, with emphasis added, is for residence or visit. (Unless this has been superceded somehow, it seems pretty clear from the legislation.)

I imagine these reciprocal agreements were largely drafted in identikit fashion. I further imagine the USA and Bermuda deviated on this clause, which is why media reports state that visits to the USA and Bermuda do not entitle state pension recipients to temporary uprating. 

But... has UK legislation somehow superseded this and closed any 'loophole' for temporary uprating to certain countries?

Section 20 of the Pensions Act 2014 covers overseas residents, and 20.3 seems to cover the 'visiting' clause:

Regulations under this section do not affect the rate of an overseas resident's state pension for any period during which he or she is in Great Britain or a territory specified in the regulations (but once the overseas resident ceases to be in Great Britain or a specified territory the rate reverts to what it would have been had he or she not been in Great Britain or a specified territory).

Sounds good on the surface... but what do 'the regulations' say?

Hmm... #98 of the Explanatory Notes of the Pensions Act 2014 Pensions Act 2014 - Explanatory Notes states:

For overseas residents, regulations may provide that such a person is not entitled to up-rating. This will enable similar provision to be made as under the old retirement pension rules. Regulations under this section will be made taking into account provision under relevant treaties, such as those in respect of the European Union, and bi-lateral treaties providing for reciprocity in social security matters and which cover up-rating.

But again, what of 'the regulations'?

Unfortunately, yet not unpredictably, the Statutory Instrument The State Pension Regulations 2015 (secondary legislation associated with the Pensions Act 2014) quickly descends into legalese and complicated referencing.

Further digging might unearth answers here.

There is also The Social Security (Reciprocal Agreements) Order 2016, but I can't say I've digested it!

why EU, and not the Philippines, USA, other country with agreement? Especially as post brexit, EU (apart from Ireland) should be no different in classification to the other agreement countries. Which they could not give a solid answer. And even said their system does not allow them to input other countries apart from UK/EU for unfreeze visiting. My guess would be that information sharing between UK and EU is still robust, as in it would be easier for DWP to check immigration records for UK/EU, to check if someone is falsely claiming they are still visiting UK/EU, to get unfrozen rates, when in reality they left months ago. Whereas for the Philippines, as an example, that level of immigration access would be difficult, or not even possible for DWP to access.

When Brexit occurred, extensive legal efforts were made to protect various rights of people who could be affected by the change in status of the UK. Thus, negotations for reciprocity on various points, including pension uprating, were robust.

Sounds ominous that non-EU reciprocal agreement countries are in the 'computer says no' category.

[RetireJapan]

I had been idly thinking about this, but it doesn't seem very practical.

Pension starts at 67, so it will probably take a while for a significant difference between the frozen Japan-resident pension and the increasing live UK pension to emerge.

Is it going to be worth the hassle to move residence to The Phillippines or a similar country, stay there long enough to become resident, then move back, at that point? Just to increase your pension by 10 or 20%?

I think it my case it will probably not.

Hopefully they will change the rules before then making this whole issue moot

[Wales4rugbyWC23]

I think the most important thing when you are in your mid-seventies is having access to a good health system and I think Japan has that in spades whether you compare it to the UK, USA or the Philippines.

[RetireJapan]

I think the most important thing when you are in your mid-seventies is having access to a good health system and I think Japan has that in spades whether you compare it to the UK, USA or the Philippines.

Not sure I would write off The Phillippines. They have international hospitals for tourists similar to Thailand. Thai international hospitals are probably way better than Japanese normal ones

[Roger Van Zant]

I think the most important thing when you are in your mid-seventies is having access to a good health system and I think Japan has that in spades whether you compare it to the UK, USA or the Philippines.

Not sure I would write off The Phillippines. They have international hospitals for tourists similar to Thailand. Thai international hospitals are probably way better than Japanese normal ones

I also worry about having access to a good health system in retirement here in Japan.
There are some good Japanese doctors around (the ones who studied abroad, if only for a year or two), but most scare me with their lack of up-to-date knowledge and their "medicine-by-numbers" approach.

[kuma]

I had been idly thinking about this, but it doesn't seem very practical.

Pension starts at 67, so it will probably take a while for a significant difference between the frozen Japan-resident pension and the increasing live UK pension to emerge.

Is it going to be worth the hassle to move residence to The Phillippines or a similar country, stay there long enough to become resident, then move back, at that point? Just to increase your pension by 10 or 20%?

I think it my case it will probably not.

Hopefully they will change the rules before then making this whole issue moot

Indeed.

Yes, as both you and Wales4RWC have noted, a period of residency in the Philippines would have to be in your 70s really to have any meaningful effect (allowing for at least 5 years of uprating in ordinary circumstances).

And yes, this is probably a thought experiment for most. Uprooting for uprating in one's 70s could be quite extreme.

However, for someone who has limited pension provision, eg 1/2 of the full kokumin nenkin coverage (giving benefits of 400,000 yen per year), little or no private pension provision, yet entitlement to a full UK state pension (possibly thanks to the write-ups on RetireJapan and MoneySavingExpert!), and limited savings, a move to uprate the UK pension could be a lifeline. (Fortunately, the efforts of RJ are helping people to avoid being in the above circumstances.)

For others, the cost-benefit analysis might be that it's too much hassle for too little reward (as the Founder says). However, if combined with other, ahem, 'schemes', the benefits could be increased, eg if someone were receiving a substantial sum, eg a lump sum from a private UK pension, a strategic exit from Japan (prior to 1/1) could eliminate the Japanese inhabitant tax associated with the lump sum income, and a substantial lump sum would ordinarily give rise to a substantial inhabitant tax bill. (Some online ethicists are prone to questioning the morality of this strategy, but it is entirely lawful.)

Finally, there is the oceangoing option... time on a British-flagged vessel apparently counts for uprating purposes.

Interested to hear in due course (be it in a couple of months or a couple of decades) whether anyone has any uprating adventures.

[RetireJapan]

Finally, there is the oceangoing option... time on a British-flagged vessel apparently counts for uprating purposes.

So a long cruise or... merchant seaman?