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Steve Bee: Will we ever have a state pension system to be proud of?

Half a million UK citizens living abroad in their retirement have had to suffer having their state pension entitlements frozen at the level they were at when they first moved away.

This is not because they decided to retire abroad but rather because they chose to retire to countries that have no “reciprocal agreements” with the UK with regards to such things as state pension payments.

There is a simple rule: if you leave the UK and retire to certain countries, your state pension entitlement is increased just as though you were still in Britain. But there is another simple rule: if you leave the UK and retire to certain other countries, your state pension is never increased again, staying frozen in time – or, actually, becoming worth less and less in real terms as time marches on.

I suppose these are not difficult rules to understand. But what is hard to comprehend is why we have such rules at all in the first place. It just does not seem like a very nice thing to do to people. It has nothing to do with how much or how little you paid in National Insurance contributions when you were accruing your entitlement while working in the UK either.

You may have seen a rather well-publicised case in the papers recently, regarding a lady called Anne Puckeridge.

She is a 94-year-old who served in the Second World War, as most of her generation did. She lived and worked in the UK until 2001, when she reached the age of 76 and moved to Canada to live near her daughter.

Her state pension was £72.50 a week in 2001 and it is still £72.50 a week in 2019. Had she not moved to Canada, her state pension would be nearly twice that now. Any financial adviser will tell you a pension that does not increase in payment will probably halve in value during a “typical” 20-year retirement.

It is one of those things you hear people saying all the time in this industry – and it is true too.

Some members of parliament have felt so moved by the plight of Puckeridge and the half a million other UK expats in the same predicament as her that they have been calling for a debate in the House of Commons on the issue. That is to be applauded and I hope they manage to get our otherwise busy lawmakers to consider it.

It is another state pension issue – like that of the millions of so-called Waspi women who were not properly informed of momentous changes to the state pension system – that one hopes will not simply be ignored.

We need a state pension system that we can both rely on and be proud of, whatever age we are; one that cares for our senior citizens and that quickly puts things right when they go wrong.

Steve Bee is director at Jargonfree Benefits



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There are 17 comments at the moment, we would love to hear your opinion too.

  1. Trevor Harrington 2nd May 2019 at 1:36 pm

    I fully agree with you Steve, and actually I would go a lot further in as much that surely a primary function of Government (any Government) must surely be to protect the infirm, socially disadvantaged, and of course the elderly in our society.

    I hardly think that the massive reduction in state pensions in recent years, and the draconian increase in the state retirement age, particularly for women, holds true to that function.

    However, we need to ask the question of afford. How can our society, our Country, afford to reverse these dreadful and massively unfair decisions, which after all were taken simply because we cannot afford the state pension as it was, let alone a state pension as we would all wish it to be.

    The debate must therefore be – Where has the money gone?

    We might look no further than the current huge social inequality, which 100 years ago was between social classes, whereas it now exists in all its disgusting and unjustifiable forms in occupational and company pensions.

    How can it be justifiable or socially acceptable, that those with huge salaries (public sector and private sector) can be given a 167% tax refund uplift to their enormous pension contributions, which they can indeed afford to pay, when others only get 125% tax refund uplift to their tiny pension contributions, which they actually cannot afford anyway?

    I am not a fan of Donald Trump, but he was elected on a two pronged format of dealing with the inaccurate (fake) press, and draining the swamp (the establishment).

    We have the same problems here, and the feeding frenzy of the last 30 years in the higher paid (establishment) pensions, is but one example of the our current social malaise.

    The haves and have nots, persist in our society, but this time it is very much in the world of pensions rather than salaries and assets.

    The debate must happen, and it is perhaps our duty as Advisers to start it.

    • Andy Robertson-Fox 3rd May 2019 at 6:43 am

      You ask where has this money gone…the answer is that it never existed as under the Pay as you Go system the income from NI contributions was set to maintain the Fund at a level to meet the claims and hold a reserve of six months anticipated expenditure should an emergency arise. The NI Fund comfortably meets the reserve requirement and with a surplus of over GBP23bn there is more that enough to meet the additional GBP600 million universal uprating is assessed at by the DWP

      • Trevor Harrington 3rd May 2019 at 12:03 pm

        We are not far apart Andy.

        I realise there is no “fund” in the sense of an accumulating fund of money for the state pension, such as in the case in a private pension.

        But there is (or was) a budget to maintain the state pension, and it is that budget which has been spent elsewhere.

        I venture the point that the “Establishment” is the new socially greedy class, and that they have been allowed to take unfair and unjustifiable financial advantage in pensions contributions and the related tax reliefs for too long.

        The result being that the budget for maintaining the state pension has been spent on things for which it was never intended, and we have therefore received a massively reduced state pension, and draconian increases to the state pension age.
        (which incidentally has absolutely nothing to do with increased longevity, as by their own ONS figures the average life expectancy in this country has not changed since the late 60s / early 70s).

  2. At last someone is addressing the real issue. We pay one of the most parsimonious pensions (as a percentage of average salaries) in the whole of the OECD.

    The cop out by our Governments is AE. Yes, better than nothing at all, but not that much better. It really is a crap scheme with so many faults. But if you are fortunate enogh to build up even a small worthwhile amount it is likely to impinge on your State Benefits, which you would have had if you had had nothing at all.

    If you add the AE compulsory percentages to NI you get a total of 33.8% of band earnings. Surely this is sufficient to fund a decent State Pension? (Provided governments are honest and don’t filch it for other things). All this talk of adding to NI for the NHS or for later life care is so much hokum. To quote Aneurin Bevan: “The secret of the National Insurance Fund is that there isn’t one”. It is all just PAYG.

    • Andy Robertson-Fox 3rd May 2019 at 6:49 am

      Bevan’s comment of course has been disproved many times…his idea was that to be a fund meant the money was invested but the NI Contributions were needed to meet current expenditure and, in theory, there was no pot. The surplus in the NI Fund is around GBP23billion and this is after the deduction of a percentage from contributions to part fund the NHS

  3. With regard to ex=pat pensions. At present if you live in the EU your pension is increased just as if you were still in the UK.

    There are just about 1 million ex pats living in the EU. What happens after Brexit? Is it likely that their pensions will also be frozen? If so the wails will be heard from Deauville & Denia to Dover.

    • Bring on the wailing then at least the present frozen 4% who have been discriminated against for the last 7 decades can no longer be ignored, their fight for justice has fallen on deaf ears for all this time and if the expats in EU countries join the frozen victims of this scandal then maybe something will be done at last.

    • Trevor Harrington 3rd May 2019 at 9:26 am

      Morning Harry,

      For years I have always advised those clients who are intending to retire abroad, or live abroad for some of the time, to retain a UK address and a UK bank account.

      The address might be a relative (child), and the UK Bank account is to receive all pensions including the state pension (amongst other things).

      Sure – there might be currency conversion costs, but as far as the state pension is concerned, the client still lives in the UK and it will therefore continue to receive inflationary rises in payments.


      • Andy Robertson-Fox 3rd May 2019 at 4:03 pm

        I think I should point out that the address one is required to give the DWP Pensions Service is that at which one normally resides and any change also has to be notified. I hope you are not advocating that a claimant should advise a UK address while actually living abroad as that is illegal and of course where a frozen pension might be involved fraud.

        • Trevor Harrington 3rd May 2019 at 4:33 pm

          normally reside at that address (when in the country), and anyone can have a UK Bank account.

          • Andy Robertson-Fox 4th May 2019 at 4:24 am

            True that anyone can have a UK Bank account – provided with most banks that it was originally set up on a UK residential address but if they have retired abroad then it is the overseas address that is of relevance to the DWP irrespective of whether it goes into a UK bank or not. It is governed by whether one is classified a resident or non resident. The increases are otherwise only payable when visiting the UK or other non frozen country as I have ascertained since living in Thailand.

        • Andy, They even have a confidential hot line and when reporting anyone with a false UK address and claiming false pensions etc and still nothing is done about it!!!

      • Christopher Petrie 14th May 2019 at 7:58 am

        Telling the UK authorities you live at an address which in fact is your children’s, whilst in reality you’ve retired abroad is potential fraud.

        It’s not something I think a financial advisor should be suggesting to his clients!!!

  4. Andy Robertson-Fox 3rd May 2019 at 6:53 am

    Thank you Steve for keeping this topic in the public eye and for praising the committment of Anne Puckridge (correct spelling!) in her part in the ICBP campaign to get this anomaly removed from the statute book; the government can offer no sustainable argument for it.

  5. This Webb got a Knighthood whemn he slyly pushed through his pensions act as A Pension Minister in coalition with the Tories in 2011.
    Hundreds upon hundreds of times the DWP have state R/A are not required and after all a dometic Act that can be revoked easily in Parliament.
    Those who could do anything about it, again and again would rather we frozen state pensioners to live in even more poverty 9is that possible) and want their own born and bred Citizens to die ASAP
    What a group of nations the UK is and never has it been United.

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