Pensions minister Steve Webb has announced the Government will close a loophole that allows 220,000 people living overseas to claim a pension based on their spouse’s national insurance contributions.
According to the Telegraph, the pension can be worth up to £3,500 a year and costs taxpayers £410m annually.
Current rules allow overseas spouses to claim the allowance if their partner has paid enough NI contributions, regardless of whether they have lived or worked in the UK.
The Government is set to announce plans to close the loophole from 2016 in tomorrow’s Queen’s Speech.
Webb told the Telegraph: “Most people would think, you pay National Insurance, you get a pension. But folk who have never been here but happen to be married to someone who has are getting pensions.”
Nigel Green, chief executive of the deVere Group, says: “There must be another way the Government can boost its coffers rather than withdrawing, generally, much-needed pensions from widows, whose spouses have, most likely, contributed for many decades.
“This policy – which was cynically framed by the pensions minister as stopping foreign citizens many of whom ‘have never set foot in Britain at all’ from claiming what they are not entitled to – will be extremely costly to enforce, will save the Exchequer relatively little, and is, many suspect, simply an ill-conceived knee-jerk reaction to UKIP’s recent successes.
“I would urge the Government to stop tinkering with the pension system as the seemingly constant changes undermine the public’s confidence in the philosophy of putting money aside for one’s later years.”
Pensions expert Ros Altmann says: “It is hard to see how the Government could single out overseas claimants if they live in the EU and treat them differently from UK citizens. That would be illegal, so my concern is that this would mean many UK residents would also lose these rights.
“Of course, in the longer term, it makes sense to move to a state pension system where each individual builds up their own state pension rights. However, it is also important that spouses who relied on a partner’s pension contributions many years ago are not robbed of their rights.”