State pension reform fears emerge but some pensioners are already missing out – are you?

Both the basic and the new state pension increase annually, with the most recent rise being 3.9 percent in April 2020. This uprating takes place under the triple lock mechanism.

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It means that the payment increases by whichever is the highest out of the average percentage growth in wages in Great Britain, the percentage growth in prices in the UK as measured by the Consumer Prices Index (CPI), and 2.5 percent.

However, the likelihood of the triple lock mechanism in the future was called into question this week.

It came as leaked documents suggested the state pension triple lock could be axed and tax hikes imposed in an effort to cover the costs of the COVID-19 crisis.

According to The Daily Telegraph, a Treasury document estimates the UK’s deficit could reach £337billion this year due to the pandemic.

Asked whether the triple lock will remain, a No 10 source said: “It’s too early to speculate about any future decisions.

“We’re facing a time of unprecedented economic uncertainty and we remain committed to the agenda that was set out in the Budget.”

Commenting on the reports, Andrew Tully, Technical Director at Canada Life said: “The decision in the 1980s to only link the state pension to inflation was seen by many as an attack on pensioners and it would be a dramatic change.

“A move to a double lock of inflation or earnings growth would mean state pensions wouldn’t fall behind the cost of living or increases in average earnings, and would mean pensioners income should rise in line with the rest of the economy.

“However the savings for Government in moving to a double-lock are more modest compared to a more fundamental change.”

Regardless of what may or may not happen to the triple lock, some people currently cannot enjoy an annual uprating of their state pension.

Some people who retire abroad may not get the increase each year, as the government website explains.

It states that the UK state pension will only increase each year if the recipient lives in:

  • The European Economic Area (EEA)
  • Gibraltar
  • Switzerland
  • Countries that have a social security agreement with the UK (but one cannot get increases in Canada or New Zealand).

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Should a person live outside of these countries, they will not get yearly increases.

If the individual returns to live in the UK, then the state pension would then go up to the current rate.

The countries where the UK does increase the state pension annually are listed below.

EEA countries and Switzerland

In addition to Switzerland, those currently living in the EEA and receiving a UK state pension will usually get an increase each year.

The EEA countries are:

  • Austria
  • Belgium
  • Bulgaria
  • Croatia
  • Cyprus
  • Czech Republic
  • Denmark
  • Estonia
  • Finland
  • France
  • Germany
  • Greece
  • Hungary
  • Iceland
  • Ireland
  • Italy
  • Latvia
  • Liechtenstein
  • Lithuania
  • Luxembourg
  • Malta
  • Netherlands
  • Norway
  • Poland
  • Portugal
  • Romania
  • Slovakia
  • Slovenia
  • Spain
  • Sweden

Countries the UK has a social security agreement with

Those living in the following countries can get an increase in their state pension:

  • Barbados
  • Bermuda
  • Bosnia-Herzegovina
  • Gibraltar
  • Guernsey
  • the Isle of Man
  • Israel
  • Jamaica
  • Jersey
  • Kosovo
  • Mauritius
  • Montenegro
  • North Macedonia
  • the Philippines
  • Serbia
  • Turkey
  • USA

While the UK does have social security agreements with Canada and New Zealand, people living in either of these countries cannot get a yearly increase.

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