This piece first appeared in The Daily Telegraph on 7 October 2000
The text here may not be identical to the published text


Pensions that will boomerang

Australia social security action

The Australian Government has placed adverts in UK newspapers this week warning potential immigrants that its social security system will be less tolerant towards them from March 1st next year.

That is the date when the 42-year-old bi-lateral social security agreement between UK and Australia will be ended. Australian Ministers warned the British government that they would end the agreement more than a year ago, and finally gave formal notice to end it on March 1 this year. Australia is angry that despite more than 20 diplomatic approaches to the UK since 1986, UK pensioners living in Australia do not have their UK pensions raised with inflation each year. Instead, UK pensions are frozen at the level they are first paid at. The result is that people who retired to Australia many years ago have pensions of just a few pounds a week.

Under the social security agreement between the two countries, Australia tops up these pensions to the level paid to its own citizens – currently A$197.05 a week (£72.45), around 7% more than the full UK pension. Australia claims it costs A$100 million (£37 million) a year to do so. But once the agreement is ended, anyone who emigrates to Australia from March 1st next year, will not get their UK pension topped up. Nor will people already in Australia who reach pension age and claim an Australian Age Pension for the first time after that date.

The UK government has stated firmly that the Australian Government’s action will not change its frozen pensions policy. The UK Government says it would cost £120mn a year to unfreeze pensions paid to UK pensioners in Australia, and if it did that it would have to extend the policy to the other countries where pensions are frozen at a worldwide annual cost of more than £275 million.

"she was a manageress in a bar, scrubbed floors, kept house, turned her hand at anything. She was a hard worker and why should she have been penalised just because she chose to come and live here with her husband?"

Most of the 460,000 UK pensioners living in ‘frozen’ countries are in old Commonwealth countries – Australia, Canada, South Africa, New Zealand and Zimbabwe, though around 10,000 live in other countries around the world. Many of these are worse off than the pensioners in Australia as no other government tops up the frozen pension.

Jessie Coaten has suffered in Canada from frozen pensions for two generations. Her mother, Catherine Woodward, died in March aged 96 after a long illness. She retired in 1969 and received a pension from the UK frozen at £3.38 a week. When she retired the full pension was just £4.50 a week and if Catherine’s pension had been fully uprated she would have been receiving £50 a week when she died. Her daughter explains the difference it would have made.

"She got just £3.38 a week - £14 a month – of course it would have made her life much easier. She worked all her life in Scotland, she was a manageress in a bar, scrubbed floors, kept house, turned her hand at anything. She was a hard worker and why should she have been penalised just because she chose to come and live here with her husband?"

The Canadian Alliance of British Pensioners, which campaigns on behalf of people with frozen pensions in Canada and throughout the world, calculates that, during her long life in Canada, Catherine Woodward lost a total of £53,759 through the policy of freezing pensions. And now her daughter faces a similar struggle.

"I am 69 now and I get a pension of around £20 a week. I didn’t do a full working life in the UK – about 16 years altogether – because I came to Canada when I was 30 to be with my mum. My pension should be around £25 a week now. So, yes, it makes a bit of a difference and of course it will get worse as the years go by. The government should give more to the people who were the backbone of the country during the war, they should look after them."

But there is no sign that the Government intends to do so. It sticks to the line that the £275 million annual cost of unfreezing pensions throughout the world is not a spending priority. The hopes of the Australian Government that "termination of the Agreement had the potential to act as a catalyst to persuade the UK Government to formulate a new social security agreement with Australia that would include indexation of pensions" does not seem well founded.

Older people who are planning to retire to Australia to be with relatives and already have visas should aim to arrive before 1 March 2001 and claim their Age Pension under the agreement. People hoping to retire to Australia who do not already have a visa are unlikely to qualify for one before that date as the High Commission says there is a limit of 500 visas to be issued before next June and a queue of 4000 approved parents and another 16,000 hopefuls waiting to be approved. Anyone already living in Australia with a UK pension entitlement who has not claimed an Age Pension from the Australian government under the Agreement, should do so before March 1 2001. Any benefits paid before the agreement ends will be preserved. But once it goes, no benefits may be paid at all.

More information:

Australian High Commission in London

Canadian Alliance for British Pensioners

Australian Government information

7 October 2000

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