This piece first appeared in The Daily Telegraph on 17 July 1999
The text here may not be identical to the published text

Australia to axe pensions for expatriates from UK

Move taken in anger at Britain's refusal to index-link pensions

The Australian government is to stop paying pensions to British citizens who emigrate to Australia from July 2000. The Australian social security minister Jocelyn Newman gave formal notice of the change to Pensions Minister Stephen Timms at a meeting in London on Tuesday.

Australia has taken the action because Britain refuses to index-link the retirement pensions paid to 205,000 expatriate Britains who have retired to Australia. That leaves them with a pension frozen at the level it was first paid abroad - as little as £6 a week after a lifetime's work in some cases.

Under a social security agreement between the two countries, the Australian Department of Social Security tops up the pension paid to UK citizens during their first ten years in the country. After ten years - and subject to a means-test - they become entitled to an Australian age pension by virtue of their residence in the country. Australia says it pays A$100 million (£42 million) a year in pensions to British ex-pats. The Minister said

"The Australian Government is no longer prepared to accept the UK's discriminatory treatment of its pensioners in Australia. I have therefore advised the UK Government of Australia's intention to terminate the Social Security Agreement. A policy which discriminates against Australia has no place in our bilateral relationship."

When Australia unilaterally pulls out of the agreement in July 2000, there will be no top up for the first ten years though the full pension will be payable to people who have lived in the country for at least ten years. A spokesman confirmed to Money-go-round that pensioners already there will not lose the pension top-ups they get.

"The Minister gave notice on Tuesday and the paperwork is being prepared as we speak. The year's notice is so that people with travel plans can still go without losing the pension rights they were expecting. But anyone who travels after July next year should be aware they will have no pension rights for the first ten years."

The Australian government has raised the matter with Britain on numerous occasions. The Labour Prime Minister Bob Hawke raised it with Margaret Thatcher in 1989. In 1991 the Australian social security minister Graham Richardson threatened to "come over here and annoy people" until Britain changed its mind. Three years later, the Australian parliament passed a law to make sure that British ex-pats in the country there claimed all the UK benefits they were entitled to. But successive UK governments have refused to change the rule which leaves 205,000 British pensioners in Australia - and more than 450,000 world-wide - with pensions that are never increased in line with inflation.

There are only 39 countries where pensions are raised with inflation including Australia's near neighbour Philippines, most of Europe, and the United States of America. But almost all Commonwealth countries - including Canada, South Africa, and New Zealand - are excluded. The Government says it would cost £275 million to extend full uprating of pensions to the rest of the world.

Australia is unique in topping up the frozen pensions paid by the UK. The Australian Age Pension is worth £76.48 a week, £10 more than the full UK pension, though to get it pensioners have to pass a stringent income and assets test. Recent ex-pats who pass those tests get their UK pension topped up to the full amount of the Age Pension. After ten years' residence, they become entitled to the full Age Pension, but the means-test claws back half the UK pension. For both groups, Australia argues, if Britain paid the full UK pension, it would save the Australian government money. About one in three British ex-pats get no Australian pension at all because their income or savings are too high.

Brian Havard, president of the British Australia Pensioners' Association welcomed the Australian move.

"Senator Newman has identified an opportunity. Britain's recent intransigence is no longer due to financial constraints but a reluctance to commit funds to resolution of a moral obligation which brings no electoral advantage."

In other countries where pensions are frozen pensioners have to live on their own resources. But Governments elsewhere are also showing signs of restlessness over the lack of movement on a problem that has been a source of contention for a decade. In February 1998 the Canadian Parliament passed a motion calling on the Government to renew its efforts to resolve the problem.

Douglas Ross, President of the Canadian Alliance of British Pensioners told Money Go Round

"The Australian Government is setting us an example. I want the Canadian Government to be more active and renew the efforts as Parliament called on them to do a year ago. Even the British Government can surely now see that the rest of the world is right and they are wrong. It is about time they acted to end this injustice."

In a statement the Department of Social Security told Money Go Round

"It would be unfortunate if there were an end to this longstanding agreement. This would be a sourcem of worry to many pensioners. The UK Government will continue to work closely with the Australian Government on issues of common concern."

17 July 1999

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