April 5, 2010

UK: Australian government backs British pensioners' rights

. LONDON, England / The Telegraph / Lifestyle / Expats / April 5, 2010 The European Court of Human Rights recently found against British expat pensioners in Australia and elsewhere who sought to have their state pensions index-linked, as they already are for their peers in the EU and the United States. By Alison Steed Jenny Macklin MP, Australian minister for Families, Housing, Community Services and Indigenous Affairs, said: "This decision is another blow to the 250,000 UK pensioners living in Australia who paid their contributions into the UK National Insurance fund in good faith. "The Australian government believes this policy is discriminatory. We have been actively lobbying the UK government on this issue. I raised this issue face-to-face with the then UK Secretary of State for the Department for Work and Pensions. The Australian government will continue to pursue this matter. Around 500,000 British expat pensioners have frozen pensions that diminish in value as inflation rises. Photo: Alamy The UK's policy severely disadvantages UK pensioners living in Australia as, over time, their UK pensions have declined in real value. "This policy continues to place an increasing burden on all Australian taxpayers, as the Australian government picks up the tab for around 170,000 UK pensioners who also receive means-tested Australian pensions – estimated at about A$100 million (£60 million) per year in additional social security payments." Australia terminated its social security agreement with the UK in 2001 because of the issue. Ms Macklin added: "I congratulate the pensioners for their tenacity and dedication in fighting hard for a fair go. The Australian government will continue to support UK pensioners living in Australia." The European Court of Human Rights has dashed the hopes of around 500,000 expat pensioners living with frozen UK state pensions abroad by throwing out their appeal to try to get their pensions increased in line with inflation. However, the fight is not over, as the expat pensioners have the support of the Australian government in trying to change the UK's stance on the issue. The judges in Strasbourg ruled that the UK's stance, which, in effect, prevents some expats living in countries such as Canada, Australia, South Africa and New Zealand, does not breach their human rights. The decision has been described as "shameful and morally unjust" by the National Pensioners Convention (NPC), Britain's biggest pensioners' organisation. The 13 retired expats who have fought the case through the High Court, the Court of Appeal and the House of Lords before going to the European Court of Human Rights, have lost at every stage. It appears their court battle is at an end. Under the current rules, the state pension is increased in line with inflation only in certain countries, including all 26 countries in the EU, Switzerland, Turkey, Norway, Lichtenstein, Iceland and the US. Michelle Mitchell, Age Concern and Help the Aged charity director, said: "This ruling is bad news for half a million pensioners, whose only fault is to retire to the 'wrong' country in the international 'postcode lottery' of pensions up-rating. "It's hugely unfair that people who have made their National Insurance contributions all their lives in the UK are being penalised for retiring abroad. "An increase to their pensions is not only due, but will also provide some respite for many older expats hit by the recession and a weak pound." The ruling affects around half of the 1.1 million pensioners living abroad, said Mark Bodega of currency exchange specialist HiFX. "The cost of living for expats receiving a fixed income in sterling has already shot up in the last few years as sterling has depreciated. So this ruling, that their income will not rise in line with inflation, as it does for pensioners in the UK, is a double blow for hundreds of thousands of pensioners. "The ruling marks the end of years of legal wranglings and is unlikely to be overruled. The current rules mean that a pensioner who paid National Insurance contributions throughout their working life, but moved overseas and took a pension from 1995, still only gets £59.20 per week, compared to the current basic state pension allowance of £95.25 per week." There are currently around 150 countries where the state pension is not automatically uprated, according to the NPC, and the total cost of uprating these pensions would be £540 million. To put this in perspective, the daily increase in the Government national debt is £397.5 million, according to figures from Credit Action. Dot Gibson, NPC general secretary said: "Around 500,000 UK pensioners who have spent years paying their National Insurance contributions had been hoping to see some justice, but have been severely let down by the European Court of Human Rights. "It is shameful and morally unjust that you can pay a lifetime into the state pension system, but the government doesn't have to increase that pension every year if you retire to Canada – but they will if you live in America. It makes no sense and will be seen by many as an affront to natural justice." Those who are denied the uprating in their pensions are also denied the Winter Fuel Allowance. This payment – £250 for those over 60 and £400 for those over 80 – goes to those in the European Union, including countries with warm climates such as Spain, but is denied to pensioners in areas such as Canada. However, while the court cases might be at an end, the campaigners have not given up hope. The Australian government has stated it believes the UK's policy is "discriminatory" and is planning to carry on lobbying the British government. The International Pensioners Consortium accepts there will be no more court cases on this aspect of their case, but it is still planning to fight to "sway the Government and public opinion in our favour". [rc] © Copyright of Telegraph Media Group Limited 2010