This piece first appeared in The Weekly Telegraph on 23 December 1999
The text here may not be identical to the published text

Still on a 1960s income? Tough.

Government has the cash to unfreeze pensions, but still refuses

The Government is sitting on a surplus of nearly £6 billion in the National Insurance fund but is still refusing to spend £300 million to end the discrimination which gives full pensions to 400,000 UK pensioners living in 39 countries but reduced pensions to 470,000 others living in the rest of the world.

Most of these frozen pensioners live in Australia, Canada, New Zealand and South Africa. They can get their pension paid abroad, but once claimed it is never raised with inflation. And the effect can be devastating. Jessie Moffat, now aged 97, retired to Canada in 1966 to be with her only daughter. Within a year Jessie's husband had died of cancer and she claimed her widow's pension of £4.16 a week. And She still gets it. IN 1966 £4 a week was a full pension. Now Jessie should get around £67. She lives in a state run nursing home and is too frail to talk. But her daughter, Madeleine Allerton, is appalled.

"Her pension has been frozen at £4.16 for more than 30 years. Over that time she has lost more than £40,000. It would have done so much for her over the years if she had had that money. My parents spent their working lives in Britain and it appalls me to think the Government there will treat their ex-patriate citizens that way. I have paid voluntary contributions into the UK pension scheme. I claimed my own partial pension a year ago. Now I too face the prospect of living on a frozen pension for many years."

Despite heart-rending tales like this -and there are hundreds more - the Government has again turned its back on helping them. It rejected an amendment put to the House of Lords which would have paid full pensions to all pensioners living abroad. The amendment was moved on October 11 by Baroness Fookes DBE - formerly Janet Fookes the Conservative MP - who told peers

"It is a long-standing grievance that has met the deaf ears of Ministers of both political parties…it has always been a question of cost. But there is a very real sense of grievance among these pensioners who are scattered across the globe. They feel that they have contributed to an insurance scheme…and that having made the contributions are entitled to the benefits."

Lady Fookes was supported by the Liberal Democrat peer Lord Goodhart QC. He also made a point that will be familiar to many readers of The Weekly Telegraph.

"Non-resident pensioners are saving money for United Kingdom taxpayers because they impose no burden on the National Health Service or on social services."

Despite these arguments, even Lady Fookes confessed "I very much hope to get a sympathetic response from the Minister, though my years in politics suggest that may be misguided or over-optimistic." She was right. Social security minister Baroness Hollis of Heigham replied to the debate

Lady Hollis said that there were now about 870,000 pensioners living outside the UK in more than 150 countries. Around 400,000 of them lived in one of the 39 countries of the world where pension are increased with inflation once a year. And 470,000 of them now live in one of the other countries where pensions are frozen. She said it would cost £300 million a year to pay those 470,000 people the full pensions they had earned.

"…pensioners who live abroad have chosen to do so, and they knew the pension would be frozen when they made that decision. That position does not represent a change in Government policy -- it has not changed since 1955….We do not consider unfreezing to be a priority call on resources."

And a month later, the Treasury admitted that the money was there and was doing nothing. On November 11 figures given to Parliament showed that in 1999/2000 the National Insurance Fund will have £5.9 billion more in it than it needs to pay for the benefits that come out of it. The main expense for the Fund is retirement pension which eats up nearly three-quarters of it. But it also pays for widow's pension, incapacity benefit and jobseeker's allowance for the first six months of unemployment together with small amounts for sickness and maternity benefits that are not paid by employers.

The surplus has built up as National Insurance Contributions increase as earnings rise, but the benefits that are paid out only rise in line with prices. In addition, falling unemployment in the UK means less is paid out in jobseeker's allowance.

The surplus cannot be spent on other benefits such as those paid to severely disabled people or means-tested benefits like income support because they all come out of taxation. So to balance the Fund either benefits like retirement pension have to be raised - or the contributions have to be cut. And despite a small cut in the contributions paid by employers from April 2000, the Treasury forecast shows that over the next two years the surplus in the fund will rise to £8.4 billion by 2001/02. Douglas Ross, President of the Canadain Alliance of British Pensioners says this shows that it is not a case of 'can't' but a case of 'won't' help nearly half a million ex-patriates on frozen pensions.

‘It is incredible that this Government is being allowed to build up a ‘slush’ fund which will no doubt be used for political purposes to help get themselves re-elected, while so many of the elderly, and particularly frozen expatriate pensioners on abysmally low pensions who have received no benefit from this government, are left out in the cold.’

UK retirement pensions are uprated in 39 countries

European Union (all)

Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden

European Economic Area (all)

Iceland, Norway, Liechtenstein

Commonwealth (5 out of 54)

Barbados, Cyprus, Jamaica, Malta, Mauritius

British Overseas Territories (2 out of 13)

Bermuda, Gibraltar (In the Falkland Islands the local government tops up frozen UK pensions to the level that would have been paid in the UK.)

Crown Dependencies (all)

Alderney, Guernsey, Isle of Man, Jersey, Sark

Former Yugoslavia (all)

Bosnia-Hercegovina, Croatia, Macedonia, Slovenia, Yugoslavia (Serbia, including Kosovo)

Others (5 out of around 100)

Israel, Philippines, Switzerland, Turkey, United States of America

23 December  1999

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