Labour issues new response over frozen pensions 'injustice' for 453,000 expats

Labour has issued a new response to calls to end the freeze on State Pension payments in several overseas countries. Thirteen MPs signed a motion asking Sir Keir Starmer's government to end the "injustice" of ex-pats in some territories being denied access to the uprating of the UK State Pension in April every year.

There are 12.7 million people claiming a State Pension, with 453,000 of these living in countries where the amount they receive is frozen at the rate when they emigrated (if already of pension age at that point) or became eligible to claim (if they reached pension age later). Government figures state that 84 per cent of those affected live in Australia, Canada and New Zealand.

Thousands of retired Brits living abroad receive just £3,000 a year on average as a result, compared with the full rate of New State Pension for 2024/2025 being £11,502 a year and the pre-2016 Basic State Pension paying a maximum of £8,814.

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In answer to a question by Conservative MP Dr Ben Spencer (Runnymede and Weybridge) asking which countries the government was discussing pension uprating deals with, Labour's Pensions Minister Emma Reynolds says there are no discussions going on. In a written response on October 24, Ms Reynolds stated: "My department is not negotiating any reciprocal social security agreements."

The Canadian Alliance of British Pensioners (CABP) has pointed out the unfairness of the current arrangements as those over the border in the USA enjoy an annual rise. Around 144,000 people in Canada are affected by frozen pensions, the alliance said, with British pensioners living there receiving an average weekly sum of £51.78 compared with the current £169.50 for a Basic State Pension and £221.20 for a New State Pension.

A spokesperson for the CABP told BirminghamLive: "Frozen countries seem to be chosen arbitrarily and include the commonwealth countries of Canada, Australia and New Zealand. British pensioners who, for a variety of reasons, now live in frozen countries have all paid into the National Insurance system while working in the UK yet are denied the benefits they paid for. 60,000 of those frozen pensioners are veterans.

"Pension payments to frozen countries only amount to 1.3 per cent of the total expenditure. The government's line is that they only uprate where there is a legal requirement to do so. The folly in this is that it is in their hands to pass legislation."

The British Government has said that bringing frozen pensions to the same level as everyone else would cost £940 million. But the alliance points out that this would only be 0.7 per cent of current pension expenditure and the figure is "disingenuous" because in previous cases of unfreezing a country the UK government has begun by first applying the current uprating percentage to existing pension amounts, which was what happened when the freeze ended for Brits living in the USA.

If the UK were to implement this same change, the Alliance says the true cost of applying the 2024/25 uprating of 8.5 per cent to British Pensioners living in Canada would be £26 million, just 0.019 per cent of the total State Pension expenditure of £12.5 billion.

GOV.UK guidance says that you only get an annual State Pension increase applied every year if you live in the European Economic Area (all EU countries plus Iceland, Liechtenstein, and Norway), Switzerland, or in any of the following countries that have a reciprocal agreement: Barbados, Bermuda, Bosnia-Herzegovina, Gibraltar, Guernsey, the Isle of Man, Israel, Jamaica, Jersey, Kosovo, Mauritius, Montenegro, North Macedonia, the Philippines, Serbia, Turkey and the USA.

Despite the UK having social security agreements with Canada and New Zealand, you won't receive a yearly increase in your UK State Pension if you live in either of those countries. The Canadian government previously said it had asked the UK and Canada to sign a comprehensive social security agreement that would allow for pension rises but says the British government "declined these overtures and maintains its long-standing position that it cannot consider the indexation of UK pensions paid into Canada."

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