Sir Roger Gale is MP for North Thanet and Chair of the All-Party Parliamentary Group on Frozen British Pensions.
Due to a bizarre quirk of history, only half the eligible UK pensioners living overseas receive the annual uprating payments that those living in the UK benefit from, while the other half do not. This is completely unjust – and leaves British people, who have made the required contributions throughout their working lives, with a diminishing income throughout their retirement.
This is an injustice which has been allowed to continue for far too long under successive Governments. It is absolutely absurd that a pensioner living in Canada on one side of the Niagara falls has a frozen pension, while a pensioner living in the United States, 500 yards or so away on the other side of the river, does not. There is no equity, no sense, and no logic in that whatsoever.
Throughout their working lives, very many of these now-elderly people, who are being shoddily treated, have not only paid national insurance contributions but paid their taxes to the United Kingdom and served the United Kingdom – in some cases, serving in our armed forces. If in retirement, having paid their dues all their working lives, they wish then to join friends or family in another country, why should they not be able to do so and take their pensions with them?
This policy is creating unfair restrictions on movement. A significant number of Commonwealth immigrants who came to the United Kingdom in the 1950s and 1960s became established here, worked here, regard themselves as British and have paid their dues all their working lives. In old age, they may wish to return to their countries of origin, but feel that they are being prevented from doing so because of the fear that their pensions will be frozen and that they will not be able to afford to live in the country of their birth. I believe this to be morally wrong.
We are also now in danger of generating a cadre of pensioners who will be coming back to the United Kingdom because they can no longer afford to live elsewhere. If they do so, there will be a significant cost to our Health and Social services. This needs to be taken into account by the Department for Work and Pensions and the Treasury.
Moreover if – and I hope we do not – the United Kingdom votes to leave the European Union, there is no guarantee that pensioners living in EU nations will continue to have their pensions uprated. A lot of these pensioners are not, as is popularly described, rich retirees living on yachts in the Mediterranean drinking gin; they are struggling. They will come home, because they will not have anywhere else to go. I suspect that the trickle of people now doing so will turn into a torrent if we leave the European Union. It is a very real issue that the DWP and the Treasury will have to face.
The All-Party Group on Frozen Pensions recognises the very real difficulties involved in resolving a problem that has been allowed to build up over many years. Successive governments have failed to address this injustice, and we must act to put it right. We cannot honourably stay where we are.
We recently had the rare opportunity to debate this recently in the Commons, and there was genuine cross-party support to find a workable solution once and for all. The Chancellor of the Duchy of Lancaster is currently considering an uprating based on today’s received pensions. In other words, if somebody had their pension frozen 20 years ago when they left the United Kingdom, and many have, they would be uprated at that figure, not at today’s figure. That would be a pittance – a pitiful sum of money – but it would be a step in the right direction. But gradually, over time, it would resolve the problem, and we would accept the principle that those pensions should be uprated in line with inflation year on year, which is the right principle.
The DWP, the Treasury, the Cabinet Office and the Prime Minister all have to face up to this issue. If we do not address it there will certainly be a moral cost, because we are in the wrong. There will also be a financial cost, on two fronts, because pensioners who cannot afford to live overseas will come home and pensioners who want to retire overseas will not go. At the end of the day, that will be a cost to the social services budget.
There has to be a solution and this Party must honour its commitment to find one and act upon it. I want this Conservative Government to have the pride and the courage to give people who are in retirement overseas the dignity that they deserve.