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Pension organisation fights for justice
David Fuller reports on the ongoing battle to get frozen pensions thawed for British immigrants
If you were to draw up a list of the key considerations you need to make prior to emigrating then, aside from getting a visa, it is likely that issues such as taking a research trip, currency exchange, organising removals, finding a job and looking at schools for the kids, will feature fairly high on it.
It is questionable, however, how many of you will have spent much time considering your pension and what happens to it once you emigrate.
With this in mind, it may come as something of a surprise to many of you to discover that when you move to some countries the British state pension you receive is frozen either at the value at which you first draw it, or if you are already drawing it, at the value you are receiving at your date of emigration.
There are estimated to be one million British pensioners living outside of the UK who hold state pensions.
Around half of these expatriate pensioners receive the same annual cost-of-living increases as those still living in the UK, while the other half do not – their pensions frozen simply because of where they have chosen to reside in retirement.
Commonwealth nations and British overseas territories are home to approximately 98 per cent of 'frozen pensioners', including 153,000 in Canada alone.
Understandably, this is an issue of considerable consternation for thousands of British expats.
However, with a little luck this situation could change in the not too distant future thanks to the actions of a non-profit organisation known as the Canadian Alliance of British Pensioners (CABP) and its sister organisations in Australia and South Africa.
These organisations were set up with the sole purpose of pressuring the British government to unfreeze the pensions paid to expats in most Commonwealth countries.
They have now united into a consortium which has brought a 'discrimination' case against the British Government in the European Court of Human Rights (ECHR).
The case is expected to be heard this autumn.
Peter Kennan, the membership director of the CABP, is quick to point out why he feels the current system of freezing pensions is unfair.
"If you retired to a 'frozen' country to be with your only daughter, how would you like to see the purchasing power of your pension cut by three by the time you died," he says. "If you had started claiming your British pension in Canada back in 1981 then it would now be worth less than a third of what it should be.
"Many of our senior members fought in the Second World War and ruefully note that they would get an unfrozen pension if they could get back into their German Prisoner of War Camps," Kennan adds.
More recently, a pensioner who emigrated in April 2002, on a then average pension of £75.50 a week, would today be receiving pension payments that are 1.2 times lower than they would be if they had been receiving the basic rate increases.
Put another way they would now be receiving 83 per cent of the indexed pension and each year this percentage will diminish.
"While I had my pension frozen, I am one of the many whose pension is part Canadian and part British," Kennan continues. "The real hardship cases belong to the people who retire and move here to be with their children.
Many are prevented from doing so by the realisation that the diminution in their income will make them a liability to their children."
The CABP estimate that the British government will save almost £4 billion this year in healthcare and other age-related costs through pensioners emigrating, while to thaw frozen pensions would cost £420 million this year – less than 1 per cent of the government's pension fund which in March 2007 had a surplus of £38.475 billion, projected to rise to £74.133 billion by 2012.
So does Kennan believe that the CAPB, which has won support from the Canadian government, can really get frozen pensions thawed?
"I'm as confident as anyone can be pending a court case," he says. "Should we get a favourable verdict then we'll hopefully see some resolution to this injustice "The British government could drag out implementation but we are currently lobbying in Westminster to avoid this."
It's been a long battle for the CABP and the other consortium members, but it is hoped that a long-awaited change to the controversial frozen pensions rule may not be too long in materialising.
For more information, visit: www.britishpensions.com
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