Frozen pensions cost expats £25,000

Telegraph

18 hours ago

Expat retirees with 'frozen' state pensions have missed out on more than £25,000 over 15 years, analysis shows.
The state pension 'triple lock' boosts the payments of retirees living in Britain every year. But around 450,000 British pensioners living abroad, mostly in Commonwealth countries, do not get this uplift.
Their pensions were frozen on the day they left the country, meaning their entitlement is whittled away by inflation each year.
A pensioner retiring abroad outside the EU or the United States would have lost out on £13,162 since 2015 compared to if they had stayed in Britain, figures from stockbroker, Interactive Investor, show.
A retiree receiving the full state pension who moved abroad in 2010 would have sacrificed £25,832 in payments over 15 years.
According to the research, if a British pensioner considered retiring abroad today, they would risk missing out on around £70,000 from their state pension over the next 20 years if their entitlements are frozen when they move. This assumes full state pension payments are uprated by 3.7pc in 2025 and by 2.5pc per year thereafter.
Britain has struck deals with the US, the majority of continental Europe and several other countries to ensure expat pensioners are shielded from inflationary pressures.
In the UK, the triple lock ensures that the state pension rises every year by the highest of inflation, wage growth or 2.5pc. The new 'full' state pension rose by 4.1pc in April to £11,973.
But in the rest of the world – including the Commonwealth – there is no 'reciprocal agreement', and British pensioners do not receive this uplift.
Successive governments have ignored campaigners' calls to uprate the pensions in part because of cost constraints.
In December, Anne Puckridge, a 99-year-old war veteran and 'frozen' pensioner, accused Sir Keir Starmer of having 'no respect' for retirees after he refused to meet her in Westminster to discuss the issue.
Ms Puckridge made the 4,400-mile trip from Canada, one of the countries where the pensions of British expats are not inflation-linked. She has calculated that her 'frozen' pension has cost her around £60,000 since she moved abroad in 2001.
The amount it would cost the Exchequer to unfreeze state pensions is contested.
Uprating the pensions of overseas residents to the level they would have reached if they had never been frozen would have cost £940m in the 2024-25 financial year, and £4.59bn between 2023-2028, according to Department for Work and Pensions (DWP) estimates.
However, campaign group, the International Consortium of British Pensioners, has disputed this figure, arguing that the uplift would only start from the day any deal was signed, rather than being backdated.
It estimates that the true cost of the policy change would be just £307m over five years, or around £60m a year. By comparison, the total state pension bill was £138bn in 2024-25.
John Duguid, chair of the End Frozen Pensions campaign, said this represented a 'drop in the ocean' for the Treasury, and that uprating frozen pensions was 'morally and politically the right thing to do'.
He added: 'This analysis underlines the scale of the frozen pensions scandal and its deeply harmful impact on some UK state pensioners living overseas – an impact that is not only financial but emotional too.
'The sense of grievance is further heightened as most victims say they were never told of the policy's existence despite paying their National Insurance dues, expecting a full and fair UK state pension in retirement.'
Myron Jobson, of Interactive Investor, said: 'Many pensioners dream of spending their golden years overseas – whether it's for a warmer climate, an improved quality of life or to be closer to family and friends.
'But while the lifestyle may be appealing, it's vital to consider how such a move could affect your state pension entitlement.'
A DWP spokesman said: 'People move abroad for many reasons and we provide clear information on how this can impact their finances in retirement.