Govt has no plans to change 'frozen' expat state pension policy

The government has not made an assessment of the All-Party Parliamentary Group on Frozen British Pensions' 2020 inquiry and its findings, Baroness Stedman-Scott has confirmed.

The All-Party Parliamentary Group, which published its findings from the inquiry on 16 December, found that the governments of Australia and Canada wanted to end the policy of freezing state pension payments to British pensioners residing in affected countries.

Responding to a written question from Lord Jones however, Stedman-Scott confirmed that the government has no plans to change the policy on uprating UK state pensions overseas.

She said: “The UK state pension is payable worldwide to those who meet the qualifying conditions.

“It is uprated where there is a legal requirement to do so, for example, where recipients are living in countries where there is a reciprocal agreement that provides for uprating.

“The government has no plans to change the policy on uprating UK state pensions overseas; the policy is longstanding and has been supported by successive governments for over 70 years."

She added: “The government understands that people move abroad for many reasons and that this can have an impact on their finances. However, the decision to move abroad remains a personal choice.

“Advice that the UK state pension is not uprated overseas except where there is a legal requirement has been provided to the public for many years. Information is provided in leaflets and on gov.uk."

The confirmation also comes amid the news that the Brexit agreement will ensure that those moving to live in EU countries from 2021 will still benefit from UK state pension increases.

Furthermore, it has been confirmed that those working in the EEA or Switzerland can continue to count future social security contributions paid in overseas countries towards meeting ‘qualifying conditions’ for the UK state pension.

Commenting on this news, Aegon pensions director, Steven Cameron, emphasised that the deal has delivered some "very welcome news" for those who retire in another EU country, estimating that without this, pensioners could have missed out on as much as £138,700.

He stated: "Few people might have appreciated just how much was at stake here.

"With many people living 20 or more years after state pension age, any form of inflation proofing is highly valuable, with the triple lock particularly so.

"An inflation linked state pension of £175.20 a week is worth around £327,000 whereas one that doesn’t increase is worth around £188,300 which is £138,700 less."

Cameron concluded: “While the treatment of state pensions was clearly not top of the agenda in last minute Brexit negotiations, the outcome will make a huge difference to those planning to move abroad in future for their retirement years.

"Fortunately, those planning to retire to the Costas won’t find Brexit has, in state pension terms, ‘cost a’ fortune.”

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