The Australian and Canadian governments have told the UK they are willing to work together to end the ‘frozen’ pension policy.
They have been calling on the UK government to act on the issue for several years.
The problem arises when a British national receiving the state pension relocates overseas and, if the country they are moving to doesn’t have a reciprocal agreement with the UK, their pension is ‘frozen’ at the time of their departure.
This means they will not see their pension uprated every year in line with their counterparts in the UK.
But Canada is one of the countries that has a reciprocal agreement with the UK in place, yet Brits in the country do not receive pension increases every year.
The All-Party Parliamentary Group on Frozen British Pensions (APPG) revealed that evidence from the two governments shows that frozen pensions for UK expats fall in value “year-on-year”, something they deemed an “injustice”.
The latest report from the APPG found that, of the 510,000 Brits who have seen their pensions frozen, around 75% live either in Canada or Australia, who both provide a full state pension to their citizens living in the UK.
Additionally, 50% of frozen pensioners receive £65 ($87, €72) a week or less, and over half struggle financially because of it.
The report condemned that almost 90% of retired expats were not informed their pension would have been frozen once they left the UK.
The parliamentary group said: “The evidence demonstrates the illogical nature of government policy, favouring UK pensioners in some countries over others. The government is now continuing to refuse to uprate the UK state pensions of UK pensioners in ‘frozen’ countries, while actively pursuing new agreements with EU countries.
“For these reasons, the main recommendation of this report is that the UK government end the ‘frozen’ pension policy. We urge the government to seek to provide UK pensioners living in ‘frozen’ countries with their full uprated UK state pension as soon as possible, particularly given the recent impacts of covid-19 on this group.
“The APPG believe that this is such an injustice that the relatively modest cost should not be allowed to be a barrier to ending the policy. Partial uprating of UK pensions could, however, be considered as an interim solution to prevent the ‘freezing’ of UK pensions moving forward, with a view to then addressing the historic injustice built into the present policy.
“It is clear from the evidence that the UK does not need to pursue reciprocal agreements to uprate the pensions of UK pensioners overseas in line with the triple lock each year. However, submissions from Canada and Australia have shown a clear willingness to work towards an end to frozen pensions. The UK government should conduct talks with these governments on this issue immediately.”
International Adviser previously reported that the Department for Work and Pensions (DWP) claimed it would cost the UK £500m to ‘unfreeze’ pensions for expats.