Pensions Uprating (UK Pensioners Living Overseas)

Alan Brown Excerpts

Wednesday 11th May 2016 Commons Chamber

[Ian Blackford]

I thank my hon. Friend for that news—I did not even know that I was up for election. He is absolutely right: we are talking today about frozen pensions, but women born in the 1950s also face injustices. Many of us on both sides of the Chamber have engaged in the debate about that, and the fight goes on. Given the importance of these issues, I have suggested to the Minister that we should take some of them out of the Chamber and have a pensions commission that can look holistically at them. We can then make sure that we get them right and accept the obligations we all have to look after our pensioners, whether that is the women born in the 1950s or the frozen pensioners who are suffering.

I acknowledge that there is a cost to the Government in unfreezing pensions, but the resulting increased migration would offer them savings to help pay for doing that. In 2010, an Oxford Economics study using Government statistics showed that a pensioner who permanently leaves the UK saves the UK £7,700 a year in NHS usage and other age-related benefits, while the lost income in relation to such a pensioner would amount to £3,900—a net saving to the Exchequer of £3,800 at 2010 prices or £4,300 at today’s prices.

Many people living in the UK today perhaps came from the Caribbean or the Indian subcontinent and worked here all their lives, but those who want to go back to their country of origin cannot do so, because they risk being penalised by a frozen pension. We must help those who want to do that, as well as UK pensioners who live overseas. This is, therefore, not just about the gross cost of increased pension spending; there is an element of potentially reduced commitments to pensioners who seek to leave the UK to be with loved ones abroad or to return to their country of origin.

Those subject to frozen pensions have waited long enough to see this matter debated in the House. We must not let them down. We need to speak up for those pensioners living in the UK who want to move abroad to be with loved ones who have emigrated and those who came to work here and who wish to return to their country of origin, but who are fearful of the impact. There is a host of reasons why a pensioner may choose to move abroad in later life; it is simply wrong to punish them for making such a choice.

Pensioners who have paid the required national insurance contributions during their working lives, in the expectation of a decent basic pension in retirement, will find themselves living on incomes that fall in real terms year on year. Paying national insurance contributions to qualify for a state pension is mandatory. All recipients of the British state pension have made these contributions, and it is clearly unfair to differentiate payment levels.

Pensioners will now face ending their days in poverty because they chose to live in the “wrong” country—in most cases with no knowledge of the implications of their choice for their pension. Some people are being forced back to the UK—away from the family they love—just to secure an income they can survive on.

Reform would bring the UK in line with international norms, as most other developed countries now pay their state pension equivalents in the way I propose. We are, I am sad to say, the only country in the OECD that does not pay pensions irrespective of domicile. That should shame us all. Why are we the only country that does not accept our moral responsibility to our pensioners? That must change.

We know the statistics—that 550,000 people are affected—but behind those numbers are 550,000 human stories. Let me take three examples of the human cost of freezing state pensions. Abhik Bonnerjee, now 73, moved from India to Glasgow in 1960. He worked in the UK for 38 years—in shipbuilding, steel manufacture and the food industry. He also owned a restaurant for six years.

Abhik returned to India in 1997 and reached the state pension age in 2008, when it was paid at £87.30 a week. He made all the required national insurance contributions, and if he was still in the UK today, he would be getting not £87 but the full UK state pension. The decline in his real-terms income has left Abhik concerned about losing his home. He now feels he may have to move back to the UK. Why are we putting such a gentleman in such a position?

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

My hon. Friend gives a very good personal example. Is there not also a paradox? Abhik faces the dilemma of returning to the UK, but if he does return, not only will his pension be uprated to the full amount, but he will be able to access health and social care, so, as well as the disruption to this person’s life, there would also be a further cost to the UK Government.

[Ian Blackford]

My hon. Friend is absolutely correct. This is not just about someone who comes back to the UK to live. Oddly enough, if such individuals came back to the UK for a holiday, they would collect their full UK state pension when they were here. The whole thing is just daft; we need to normalise it and accept our full responsibilities.

Let me give the example of Rita Young. She is 78 and lives in Peterborough, in the UK. She retired in 2002, aged 67, having enjoyed a long career in market research and as a community volunteer. Rita’s son moved to work in Australia some time ago and now has a family there. Since being widowed, Rita has wanted to join her son and grandchildren, but she has felt unable to do so because of the prospect of a frozen pension.

As Rita gets older, she finds daily life increasingly difficult, especially as she does not have a family around her to rely on. She is deeply saddened that she is not able to be with her family during the later stages of her life. She said:

“I have worked and contributed to my state pension all my life. It doesn’t seem fair that the government can just stop uprating it because I want to be with my family.”

That is the human cost of frozen pensions.

Lastly, there is former college lecturer Anne Puckridge, now 91. She lived and worked in the UK all her working life, paying mandatory national insurance contributions throughout. In 2002, aged 77, she finally retired and decided to move to Canada to be with her daughter and grandchildren, who had moved to Calgary. Fourteen years on, Anne, who served as an intelligence officer in the Women’s Royal Naval Service in the second world war, is struggling to live on a frozen pension of £75.50 a week.

--- Later in debate ---

[Mhairi Black (Paisley and Renfrewshire South) (SNP)]

I thank my hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford) for securing this debate.

It is fair to say that, given my youthfulness, prior to last year I did not have a great understanding of pensions. But the more I look into the different issues, the more bizarre the world of pensions seems to get. I thank the hon. Member for North Thanet (Sir Roger Gale) for mentioning the fact that we are not at the WASPI meeting because we are in this Chamber debating this issue. He made an interesting point, which is in fact one reason why I find this debate incredibly bizarre. He said that the Government claim to have received legal advice that raises fears that people will be able to claim for back payments. But legal advice received by the International Consortium of British Pensioners from Blackstone Chambers contradicts that.

The Minister said that many pensioners overseas whose pensions are frozen are compensated through means-tested benefits in their country of residence and implied that unfreezing those pensions would make savings for foreign Governments at the expense of the UK taxpayer. But again, when we look at the facts, the ICBP’s recent review of the countries with the largest numbers of British pensioners with frozen pensions shows that that is simply not the case. The vast majority of pensioners would benefit greatly from an uprating in full.

That brings me to the person who my hon. Friend the Member for Ross, Skye and Lochaber mentioned, Anne Puckridge, the former college lecturer, who is now 91 years of age. She worked in the UK all her life, then moved to Canada to be with her daughter and grandchildren. Fourteen years on, Anne, who served as an intelligence officer in the Women’s Royal Naval Service during the second world war, is struggling to live on a frozen pension of £75.50, which is what she was entitled to when she moved. As my hon. Friend pointed out, she now fears that she will be forced to move back to Britain to be able to survive. He gave us some telling quotes. She has said:

“It’s the small things, and the injustice, that is really getting to me…I value my independence, but I can’t go on living on the breadline and I don’t want to inflict this on my family.”

That is telling. She is not asking for millions here—she does not want to raid the bank. She is asking for the extra 20 or 30 quid that she is entitled to after she paid into the system all her working life. Anne went on to say—this is perhaps the part that gives us most insight:

“As well as ever-increasingly poverty, I feel a sense of stress and shame, which is affecting my health.”

I looked through the various briefings on this issue and the previous debates there have been, for years now—as the Minister rightly pointed out, this debate has been going on since probably after world war two. In 1981, the line from the Government was not far off what the Minister said today. They said that they could not, unfortunately, unfreeze the pensions because that was incompatible with the Government’s policy of containing the long-term cost of the social security system to ensure that it remained affordable. This is an incredibly cynical point—I am getting used to those in here, so I thought I may as well join in—but it concerns the real lunacy of the argument about cost. Instead of giving people who have paid into the system all their life the £20 or £30 extra that people in the UK get and to which they are entitled, we are saying, “We’re not going to give you that money, but you can go and live abroad, make yourself ill through poverty, worry and the stress of having to come home. When you are forced to return to Britain, don’t worry, we’ll foot the bill for the NHS and everything else.” The argument about cost does not stand up—costs will increase when pensioners who have been made ill through stress or whatever, have to come back in order to survive.

[Alan Brown]

Yet again, my hon. Friend is making a powerful argument. Does not another nonsense argument about cost concern the reciprocal arrangement that is needed, given that Canadians in this country can get the full state pension from their country but British pensioners cannot get it in Canada? This is not about protecting social security in this country, because a reciprocal arrangement could easily be put in place. We are supposed to have the best social security system in the world, so the argument about cost is nonsense given that the Canadians can afford to pay for their citizens in this country.

[Mhairi Black]

I could not agree more with my hon. Friend, and I will touch on our relationship with Canada in a minute. My argument is supported by a 2010 study by Oxford Economics, which used Government statistics to show that a pensioner who permanently leaves the UK saves it £4,300 a year in NHS usage and other social security benefits. We are placing an increasing workload and cost on to the NHS and other public bodies—the very bodies that we are simultaneously using as part of the argument to continue with frozen pensions. It makes no sense.

The third reason often given by the Government for this measure is that there could be some sort of legal or political backlash, but that is not the case. This issue has been debated for years, and Annette Carson made a legal challenge against the Government on the basis of discrimination. She said that because she was in South Africa, which does not have a reciprocal deal with the UK, her pension was frozen, whereas if she had moved to an EU country—or a country with such a deal—she would have had an uprated pension. The judge ruled that she lost the case and that there was no discrimination, but he noted just how ludicrous the system is, and how much confusion there is about it. He ruled that it was a political, rather than judicial, decision, which shows how crazy these plans are—the hon. Member for Worthing West (Sir Peter Bottomley) used that word previously.

Any pensioner who moves within the EU or the European economic area gets an increase, and the UK has reciprocal agreements with 16 countries. As the hon. Member for Vauxhall (Kate Hoey) pointed out, our agreements with Canada, New Zealand and Australia do not allow for uprating, yet those three countries are home to 80% of overseas residents who do not receive upratings.

I agree with everything that the hon. Member for Broxbourne (Mr Walker) said about choice and how that has to work both ways with the Government. The Minister said that pensioners can choose whether to go to country A that has a deal, or country B that does not, but that does not add up. Surely true freedom would allow someone to choose freely where they want to go, knowing that they have paid in all their life and will now get that back. It is not for the Government to put a hindrance on where people can choose to spend the pension that they have built up over their lifetime.