‘Isn’t this the greatest unfairness of all?’ – frozen state pensions policy criticized

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This can happen when people move overseas. In this case, they do receive their state pension, although it is not increased unless there is a specific agreement between the UK and the person’s country of residence.

This can lead to retirees losing out on thousands of pounds in their retirement.

The issue was brought up recently in the House of Lords by Lord Jones of Cheltenham, a Liberal Democrat MP.

He called on the government to reform frozen pensions, pleading that they “look at the plight of those retired women who now live in countries where their UK state pensions are frozen? Isn’t this the greatest unfairness of all?”

Baroness Scott of Bybrook, the Conservative whip in the House of Lords, replied: “This is an issue that has come up before in this chamber and we are looking at that but we have no plans to change anything at this time”.

Frozen pensions affect about four percent of UK pensioners, estimated to be around half a million people. Many of these are veterans, public servants or from the Windrush generation.

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As soon as these people move out of the UK to the affected country, their pensions are frozen.

For these people, their pensions are paidto them but only at the same rate it was when they left the UK.

Every year, state pensions increase according to the triple lock, which ties it to the highest out of inflation, rises in earnings or 2.5 percent.

When people miss out on these state pension increases, it effectively means the value of their pensions is falling in real terms.

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This means that despite putting in the same National Insurance contributions as everyone else, they are losing income because of their choice to live abroad.

The All Party Parliamentary Group on Frozen British Pensions has previously called on the Government to “urgently review the frozen pension policy given the evidence of destitution facing many UK pensioners overseas and the recent impacts of COVID-19”.

They made these calls with particular attention to “veterans, former public servants and members of the Windrush Generation”.

These people may have returned to their country of birth to be with family and are being punished for it.

When part of the EU, the UK fell under EU social security coordination rules which meant the state pension increased at the same rate if a person was in an EU country as it does in the UK.

This arrangement also applies to EEA countries and Switzerland.

During the Brexit negotiations something similar was considered.

A convention between the UK and Ireland was signed which guarantees “reciprocal rights” would continue to operate.

State pension uprating was provided for by the Withdrawal Agreement to those living in an EU country by December, 31 2020 if they meet residence conditions.

However, no provision is currently in place for those retiring abroad after that point.

In February 2019, the Government estimated the cost of uprating frozen pensions to the amounts that would have been in payment had they not been frozen at £600million in 2019/20, rising to £640million by 2023/24.

The International Consortium of British Pensioners (ICBP) recently revealed that over 75% of UK savers aren’t aware that their state pension could be frozen at its current rate if they choose to retire abroad.
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