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Reproduced from the Newsletter of
The British Ex-Services Association
(Queensland)
Issue 1, Volume 2, February 2004
Frozen UK
Pensions Fact Sheet
Information for the many Australians who have full or part British
Pension entitlement.
Australia has 225,000 residents whose UK non-means tested State pensions
are frozen; these represent about 47% of the 480,000 UK pensioners
worldwide who do not receive regular inflation up-rating to their UK
pension. A further 145,000 living in Canada,
35,000 in South Africa,
and 34,000 in New
Zealand are similarly affected.
As an example, 95-year-old William Hayes now living in Queensland receives a full UK pension of £6.70 per
week since about 1973. He should receive £77.45 per week. It is
calculated he has been deprived of about £59,000 since his
retirement; at today’s rate that is approximately A$140,000. The
Australian government in its generosity has made good most of the
deficiency. The UK pension arises because everyone who works in the UK, for
about 10 years for women and 11 years for men, pay into the National
Insurance (NI) fund each week and it is from this fund today’s
contributors fund State pensions for today’s pensioners.
Provision for any means-tested pension “top up” by the
Australian government is no longer available to British pensioners since
March 2001; not until they have lived here for 10 years.
About 420,000 UK
expatriate pensioners do, courtesy of bilateral agreements, receive regular
inflation adjustments. These fortunate pensioners live in such countries as
Turkey, The Philippines, USA, Israel and the EU countries, Barbados,
Jamaica, Cyprus, Malta, Mauritius too. It is because of this illogical
state of affairs that it is claimed the UK
pensioners in Australia,
Canada,
etc., are being discriminated against on the basis of their country of domicile.
The UK
government complains it “cannot afford £400-million per year to
up-rate all pensions world-wide, contributions are
for the pensioners at home”.
Currently this claim is a fabrication because the NI account has a
£30-billion balance which the actuary states “is significantly
above the required prudential balance”, this should be about
£10-billions, so the fund has excess funds of about
£20-billion. (A treasure chest for political purposes prior to the
next election?). The £400-million per year represents just 0.7% of
the total annual income from National Insurance contributions.
Moreover interest income for the NI fund approximates
£1.4-billion per year, in a low interest and dividend environment.
Furthermore from the 30-million present contributors, it would cost
about 5 pence per day per contributor to provide that £400-million
each year, a very small amount having regards to the current cost of living
in the UK.
This alleged discrimination is the subject of an ongoing legal case,
which is now at the doors of the House of Lords. It is being run on behalf
of a Ladysmith, South Africa
based pensioner Annette Carson and funded by pensioners’
contributions collected from around the world by pensioner associations in Canada, South
Africa, Australia
and New Zealand.
This legal fight by Mrs. Annette Carson could bring significant
benefits to Australia.
An annual foreign exchange inflow of about £450-million would arise
from the additional UK
pensions. The full beneficial impact on the Australian exchequer is
estimated at £200-million minimum.
Mrs. Carson’s case is soon (early October 2003) to be heard in
the House of Lords, to which a petition has been lodged to hear an appeal.
The appeal, if granted, will take place mid next year, 2004. Failure by the
Lords to accept this petition and hearing has led her lawyers to opine that
that would exhaust the UK
legal system, which in turn should enable the Carson case to be taken directly to the
European Court of Human Rights.
It is in this Strasbourg
based Court the British pensioner associations believe that they will
receive a favourable outcome. This is because every nation in the EU except
the UK
pays its expatriate pensioners an inflation up-rating to their pensions
each year.
In Australia
we have been requested by the Canadian and South African associations to
establish a new organization (BPIA) to help fund the ongoing legal costs of
Mrs. Carson’s case. Australia
is home to the greatest number of British pensioners by far but their
contributions to the legal costs to date have been less than 10%.
The Carson case is being brought
against the UK
government on the basis of a breach of the UK’s Human Rights Act,
Articles 1 and 14, especially the latter article on the basis of
discrimination by way of domicile.
Jim Tilley, Chairman BPIA
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