Pensioners who have moved abroad have seen their state pension payments remain at the same rate they were when they left, as they are not entitled to an uplift – even though they are British nationals
Thousands of pensioners living abroad could have missed out on almost £26,000 worth of state pension payments, new analysis has found.
Under the triple lock promise, the state pension is subject to an annual rise each year. This ensures it increases by either inflation (based on the previous September’s figure), wage growth (the average increase between May and July), or 2.5% – whichever is the highest.
However, under the Department for Work and Pensions (DWP), the state pension is only uprated for someone if they live in the UK, the European Economic Area (EEA), Gibraltar, Switzerland, or countries with a social security agreement with the UK.
However, popular retirement spots outside of Europe, including Canada, New Zealand, and other Commonwealth nations, do not have this agreement.
Pensioners who have moved to these countries have seen their payments remain at the same rate they were when they left as they are not entitled to an uplift – even though they are British nationals.
The state pension rose again in April by 4.1%. This saw the weekly payments for the new state pension rise to £230.25 a week, or £11,973 a year.
According to Interactive Investor, someone who retired abroad to a country 15 years ago where UK state pensions are not increased would have had their annual state pension frozen at £5,077. This was the state pension level in 2010.
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Pensioners living in the UK, as well as other areas within the agreement, will have seen it rise each year.
Interactive Investor calculations found that pensioners living abroad would have lost income worth £7,391 over the course of five years. This rises to £13,162 across 10 years, and a whopping £25,832 over 15 years.
Myron Jobson, senior personal finance analyst at Interactive Investor, said: “Many pensioners dream of spending their golden years overseas – whether it’s for a warmer climate, an improved quality of life or to be closer to family and friends. But while the lifestyle may be appealing, it’s vital to consider how such a move could affect your state pension entitlement.
“If you move to a country where the UK has no uprating agreement, your state pension will be frozen at the level you first receive it. That means you won’t benefit from the valuable triple lock increases that pensioners in the UK enjoy each year, and over time, that can seriously erode your spending power.”
The International Consortium of British Pensioners (ICBP) – which has bee lobbying for change in state pension rules for years – estimates that 453,000 pensioners do not get the uplift in pension payments each year.
This week, the DWP confirmed it had “no plans to review such reciprocal social security agreements”. Pensions Minister Torsten Bell confirmed this in a written response to Liberal Democrat MP Liz Jarvis, who asked if the DWP “plans to review its policy on freezing State Pensions for people who move abroad”.
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