This piece first appeared in The Daily Telegraph on 26 January 2002
The text here may not be identical to the published text

Expatriates frozen out

Offical blunder lands couple with £4000 bill

An elderly couple in their seventies face a cut in their retirement pension of nearly £1500 a year and a demand for a repayment of more than £4000 after the Department for Work and Pensions paid them too much for nearly seven years.

Wilfred Watton and his wife Doris moved to Canada in 1994 to be near their son and his family in Tofield, a small town near Edmonton, Alberta. "I wrote to the DHSS weeks before to tell them I was going to Canada, but I never heard from them. I arranged with my bank manager that the pension should be paid into my bank account in England which he said was all right."

For the next seven years Wilfred and Doris got their pension paid every four weeks into their UK bank account and transferred the money to Canada. Each April the pension was increased in line with inflation. But then earlier this year, Doris’s pension stopped coming through. After her daughter-in-law made enquiries it was reinstated – but both pensions were then reduced.

"My pension was £364 every four weeks but now has been reduced to £277. My wife’s has also been cut to £138 from £162. Altogether they are now paying us about £110 less every four weeks. It’s a lot of money. And then they said that they wanted back nearly £4000 overpaid. At first they threatened to reduce our pensions even further until it was paid off. But I wrote back and said I wanted to appeal and they have not done that but they still want the £4000. It is a disgrace. I won’t pay it. We don’t lead an exotic life her, we’ve got our little bungalow and everyday commitments and this is a lot of money for us."

Wilfred and Doris have been caught in a cruel twist to the frozen pension trap that affects nearly half a million UK pensioners around the world. They live in countries where the UK refuses to pay the full uprated retirement pension. Instead, the pension is paid forever at the same rate when they first claimed it abroad – it is not increased each April. Canada is one of the countries where pensions are frozen and when the Wattons moved the annual increases in their pension should have stopped. But due to an error on the part of the Department of Social Security (now the DWP) their pensions were increased each year. When the Department discovered the error earlier in 2001 it was corrected and their pensions were reduced to their 1994 level.

Although the Department was within its rights to reduce the pensions paid in future to the frozen 1994 level, it had no right to demand back the money it had mistakenly overpaid. To do that the Department would have to show that Mr and Mrs Watton had ‘failed to disclose a material fact’ namely that they were going to live in Canada. But as Mr Watton wrote to the Department to say they were moving, the error of uprating the pension was made by an official at the Department of Social Security, perhaps because the pension was paid into a UK bank. There is therefore no power to recover the benefit.

But Wilfred is not just annoyed about the mistake and the demand for £4000. He and Doris face a perfectly legal cut in their pension of £1430 a year because they live in Canada, where UK pensions are frozen, and not in one of the 39 countries where they are uprated each year in line with inflation.

"I started work in 1937, served in the RAF throughout the war, and then worked for British Aerospace until 1984. The Queen is still head of State in Canada and yet the British Government sees fit not to pay us in full the pensions that we have paid for over all those years. It is a disgrace. If I had lived in the United States of America or the Philippines I would be getting my pension in full."

Almost all the people affected by this arbitrary rule which freezes pensions in some countries but not their neighbours live in the Commonwealth. New figures from the DWP show that 97% of the 490,200 people with frozen pensions live in Commonwealth countries. The biggest number are the 224,060 in Australia with Canada second at 146,870.

A major campaign to get the Commonwealth to lobby the British Government to unfreeze pensions paid in its member states was frustrated by the cancellation of the Commonwealth Heads of Government meeting which was due to start this weekend in Brisbane, Australia. Nevertheless, the campaign continues. Douglas Ross, President of the Canadian Alliance of British Pensioners, says "This shameful UK policy has created the disgraceful situation this poor couple find themselves in, demanding nearly £4000 and threatening to cut off their remaining pension until it is paid. Their must be hundreds of similar cases that have never to come to light. The Government is making elderly pensioners feel like criminals when they are simply claiming what is justly theirs."

Expatriates receiving UK retirement pension or widow’s benefit July 2001
Frozen 490,200
Unfrozen 441,800
Frozen Commonwealth  
Australia 224,060
Canada 146,870
New Zealand 37,000
South Africa 36,170
Pakistan 6,700
Zimbabwe 4,980
India 4,660
Other 18,860
Total 441,580
Unfrozen Commonwealth  
Jamaica 24,300
Channel Islands 13,590
Cyprus 7,490
Barbados 4,100
Malta 2,710
Other 1,050
Total 53,240
Total Commonwealth 494,820
Source: Dept for Work and pensions  

26 January 2002

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