Will your state pension be frozen if you retire abroad? Here is a full list of countries affected
I live in a country – like many – with a frozen pension.
Now that Labour is in charge of pensions, will they bring us up to date and bring us into line with pensioners working from home?
This is Money’s Tanya Jefferies responds: Many elderly expats live in a country where their state pensions are currently frozen at the amount they were set for when they moved abroad.
This depends entirely on where you retire, because the Government has made individual agreements with some countries but has left out another 150. Scroll down for a map and a complete list of frozen countries.
Any reader considering retiring abroad should check out this information, because unless you are wealthy, your choice of destination could seriously affect your financial well-being in old age.
Campaigners have tried for many years to persuade the government to unfreeze expatriate state pensions, and countries including Canada and Australia have lobbied for change, but to no avail.
We asked a well-connected pensions expert for his view on whether the new Labour government will look again at the issue.
Henry Tapper, President of AgeWage, responds: This is a question that almost half a million British pensioners living abroad will be asking themselves. I have been asking myself the same question.
I am sorry, but I cannot give you any expectations that the Labour Government will be more generous on this matter than its predecessors.
While no official I spoke to ruled out the possibility of the rules changing, no one gave them any hope and Labour’s manifesto is silent on the matter.
The Government says that if you return to the UK or go to live in a country where the UK pays state pension increases to British expats, you may have the increases during the time you are resident in your new location.
But don’t expect to be fully reinstated to get the pension increases that their UK peers got.
Henry Tapper: Whether or not state pension increases are achieved depends on a tax treaty lottery
Missing out on a raise is never nice, but missing one when everyone else is getting one isn’t nice at all.
But many people have been missing out on state pension pay rises for the past 40 years.
If you, as a woman, migrated to Australia as a state pensioner in 1984, you could be celebrating your 100th birthday this year with a state pension of £34.05 a week.
By comparison, if you had stayed in the UK, your old basic state pension would have paid you £57.60 in 1994, £79.60 in 2004, £113.10 in 2014 and £169.50 today.
The triple lock suggests that the real income growth rate will not decline.
The principle behind the government’s policy of freezing state pensions was established more than 70 years ago and means that in extreme cases expatriates may receive less than a quarter of the pension they would have received had they stayed where they are.
Whether or not you receive increases in your state pension (most recently with the triple lock) depends on a tax treaty lottery.
Some countries, including the US and Switzerland, have treaties, others do not. You can check the details on this government website: Countries where we pay an annual increase in the state pension.
The government is periodically asked to change the rules, most recently in 2023. Last year, more than 56,000 expats signed a petition to lift the freeze.
The Government issued a formal response acknowledging that as of March 2022, there were around 480,000 UK State Pension recipients living overseas who were not receiving State Pension increases; 84 per cent of them lived in Australia, Canada and New Zealand.
The cost of paying for increases in expatriate pensions between 2023 and 2028 would be more than £4.5bn. In a briefing on the issue to MPs, he said:
In extreme cases, expatriates may receive less than a quarter of the pension they would have received had they stayed where they are.
The Government has no plans to change the policy of topping up UK state pensions overseas; the policy is long-standing and has been supported by successive governments for more than 70 years.
The report speculates that this is due to cost constraints and a prioritisation of UK pensioners.
But it is not clear why treaties have been signed with the United States and not with Commonwealth countries. To most expatriates this seems madness and indeed many MPs from all parties have argued for reform.
Pensioners do not get the benefit of a state pension for free. Pension credits are earned either by earning and paying into National Insurance or because someone is unable to earn money for a good reason.
What’s more, most pensioners who retire abroad have to rely on overseas medical facilities, the cost of which is not charged to the NHS.
So while expat pensioners are receiving second-class treatment in terms of their state pension, they may be getting zero value for their money from the NHS.
The government may argue that it publishes the rules and has done so for decades. Some cynical commentators suggest that the rules do not change because expatriates rarely vote.
You don’t seem like the sort of person to let this situation go. I would suggest you raise the matter with the new Pensions Minister, Emma Reynolds.
Unlike her predecessors, Emma is a minister for both the Department for Work and Pensions and the Treasury. If anyone can get things done, it’s her.
Will you get increases to your state pension if you retire abroad?
Where are state pensions frozen? Whether an expat’s pension is frozen or not depends entirely on where they move to (Source: International Consortium of British Pensioners)
Source: International Consortium of British Pensioners
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