Freezing of expats British OAP's resident outside the EU

[Thibault]

[quote user="Araucaria"][quote user="Thibault"]

It all started to go horribly wrong post 1945 when the then government decided that a full state pension would be paid to anyone qualifying, rather than their receiving a pension based on their own specific contributions.  Since then, the state pension fund has been playing "catch up".  That, coupled with a falling birth rate and a rising number of state retirement age people has led to the present problems.[/quote]

I think quite a lot of people (including my grandparents) would take issue with the idea that "It all started to go horribly wrong post 1945 when the then government decided that a full state pension would be paid to anyone qualifying, rather than their receiving a pension based on their own specific contributions". If you only give pensions to people who were able to afford contributions when they were working, then you condemn many people to follow a low-paid working life with poverty in old age.

The government back in 1945 took a conscious decision NOT to have a funded state pension scheme, and all governments subsequently have gone along with this. There never has been a "state pension fund" in the UK. Old age pensions have always been paid out of current taxation and current national insurance contributions. For my part, I find it quite impossible to believe that at a time when visibly we in the west (and not just the UK, obviously) have never been better off, we can't afford to pay a decent pension to those who are too old to work.
[/quote]

 

You misunderstand me, I was not advocating paying pensions according to contributions, merely stating that the State's coffers had to pay out the full pension right from the start, when it was "unfunded" in the sense that few contributions had been paid.  The State has been trying to "catch up" ever since.  This problem is compounded by the increase in life expectancy and the falling birth rate, as well as the recent and current economic conditions.

[allanb]

[quote user="Russethouse"]Where do you think the extra funds to pay a bigger pension are going to come from ?[/quote]

Rh, we're not talking about a "bigger" pension here: it's more pounds, but the pound has depreciated.

Consider this: imagine a company that in addition to its current expenses (materials, wages, utilities, etc) is paying pensions to former employees.  Suppose that in a particular year there is general inflation of 5%, but nothing physically changes: it produces and sells the same number of products, it employs the same number of people, it consumes the same amount of materials and energy.  But because of inflation, the prices of all those things increase by 5%. 

Now the company says to its retired employees "sorry, we can't afford to index your pensions - where's the money coming from?"

It's not difficult to spot the fallacy, is it?

[Russethouse]

Firstly as I understand it, Private pension schemes are run in a different way, funds are invested and pensions paid from the returns on those investments. Not every fund is providing in the way Coops fund is for example, it depends on investment managers etc. In addition the company in your example would have most likely put its prices up to cover its outgoings....

Secondly many people in Private schemes are finding they are not providing the package anticipated, for instance there are very few final salary schemes left.

The fact is that the UK has many calls on its resources and while in a perfect world I would agree that pensioners everywhere would get the increases, my opinion is that sadly this is pretty low down the list of priorities at this time.

 

[allanb]

[quote user="Russethouse"]Firstly as I understand it, Private pension schemes are run in a different way, funds are invested and pensions paid from the returns on those investments.[/quote]But that's irrelevant.  I think it's generally accepted that state pensions are usually not funded (whether they should be is a different question).  What we're discussing is whether the government's promise of indexation should apply to everyone who's entitled to the state pension.

[quote]In addition the company in your example would have most likely put its prices up to cover its outgoings....[/quote]Of course.  I said exactly that in my assumptions.  That's the answer to the question "where will the money come from?"

[quote]... in a perfect world I would agree that pensioners everywhere would get the increases...[/quote]Well, I can only repeat my point, that these "increases" are not really increases.  If your pension is not adjusted for inflation, then its real value is falling; and if the real value of a pension is falling, then the real cost of paying it is also falling.

The government doesn't want overseas residents to understand that.  If it were understood, the statement "we can't afford to index pensions for non-residents" would be recognized as BS.

A final question: if you think it's right to index UK state pensions received in France or Spain, why should they not be indexed if received in Canada or Australia?  I know that there are agreements which supposedly provide the legal reason, but this thread is mainly about what is fair.

[YCCMB]

As far as I have been able to establish (and I admit that I could be wrong) this situation has been in existence since at least the 1970's.

This means one of two things:

People who emigrated IN the 1970's or since aty well before their retirement age are now coming up to retirement age and expecting a full, index-linked basic UK pension, in which case I would have expected (as I said earlier) that they would have had ample time in their new country of residence to amass pension entitlement. If someone can convince me that a person in this situation merits receiving a full index-linked UK pension, convince away....

Most of the half million people widely reported to be affected knew what they were in for when they left the UK and had the option to move to a country WITH a reciprocal agreement, or to stay in the UK.

allanb: You say that an inflation-linked increase simply ensures that a pension doesn't devalue. We know. It's just like a salary in that respect. However, speaking personally I haven't had a pay rise for the best part of seven years, so I know all about seeing my income diminish in real terms. Many of my friends and acquaintances who are working are in the same boat. If the Government is going to give you a fiver, it's still a fiver, no matter what its purchasing power. Its "value" in terms of purchasing power is immaterial, it's still a fiver less that the Government can spend elsewhere....The "cost" of administering this, however, is not just that fiver. Far from it.

This is an appeal which has already been lost in the European Court of Human Rights. Given the increased frailty of the UK's finances since that appeal was lost in 2010, what makes anyone think that now, of all times, it might get a more sympathetic hearing, always assuming that the petition does get the 100,000 signatures being sought and that this does give rise to further Parliamentary debate?

[idun]

And in spite of Nomoss being given what was probably incorrect advice about voluntary contributions, I reckon that IF people had made them from the 70's they'd be on a winner.

We paid contributions from 1982 and the system appeared to have been well established then and it was £3.65 a week. I think that the most we paid was around £7 a week, a good investment for a hundred odd pound return per week as long as you shall live. Well I say that last bit, a little tongue in cheek as I am not convinced that there will be pension for the rest of my days. And probably if they do stop them or reduce them radically, then my days will probably be reduced rapidly too. [:D]

 

[NormanH]

With my luck if they reduce pensions drastically I will live to 100, in poverty.

[allanb]

[quote user="You can call me Betty"]If someone can convince me that a person in this situation merits receiving a full index-linked UK pension, convince away....[/quote]

Betty, the short answer is that all people receiving a UK state pension have morally the same rights, no matter whether they live in the UK, or France, or Canada.

The idea that your entitlement should depend on where you choose to live, or where you choose to spend the money, is bizarre. 

The idea that your entitlement should depend on what other income you have is perhaps not bizarre, although I personally wouldn't agree.  But if you support that, then - again - you have no reason to discriminate based on geography.

You obviously think that my relative in Canada (who doesn't actually have much other income) should continue to receive the same fixed amount of pounds throughout retirement.  I wish the two of you could meet on neutral ground.

[idun]

I have family and friends of the family in Canada and they are delighted to get their brit pensions and some hadn't even realised that they could get it. One  lady hasn't got much other income and my uncle has a decent pension, not one complaint, never mind bitterness.

 

No one makes us move, we make choices, and we should look at the consequences of our move. And as Betty says, if people have moved years ago, then they could make the choice to build up a pension elsewhere or not.

 

 

 

[Araucaria]

[quote user="Russethouse"]

For my part, I find it quite impossible to believe that at a time when visibly we in the west (and not just the UK, obviously) have never been better off, we can't afford to pay a decent pension to those who are too old to work.

 Good grief - whats your middle name,  Macmillan? [;-)]

With rising unemployment and the economy only improving by baby steps, if that, I think you might need to re assess that!

 Where do you think the extra funds to pay a bigger pension are going to come from ?

[/quote]

RH - I'm no Tory. Increasing the basic state pension falls into the "jam tomorrow" category (or maybe it's direct opposite) for politicians. When there is a recession obviously we can't afford it: when there's a period of economic growth obviously we don't want to risk raising taxes and damaging the prospects for future growth (back in 1959, Macmillan's election slogan was "Life's better under the Conservatives - don't let Labour ruin it!", and higher taxes were just what he meant).

The figures for GDP per capita, adjusted for inflation give an idea about how well off we are collectively. They show that in the UK, and at 1990 equivalent prices, per capita GDP in the UK in 1945 was about USD 7,000, and in 2008 it was over USD 23,500. Are pensioners more than three times better off in real terms now than they were in 1945?

I'm not better off now:  I retired in 2005 and my pension now is less than a quarter of what I was earning in 2005. You might not be better off either. As a whole, however, we in the west most certainly are - you might argue about whether it all peaked in 2008 or some other year, but the overall position isn't in dispute.

But in my view it is a disgrace to make the undoubted effects of a recession fall most heavily on those least able to afford a reduction in their income.

[YCCMB]

And you obviously think that I, and those who still live and pay taxes in the UK despite being on incomes which are (well, mine is..) actually going down both in actual monetary terms AND value should be delighted to subsidise people living in Canada, whilst we see every area of public service and publicly funded provision being cut..

It appears that you either don't want to address the other questions I raised earlier, but I will address your idea that people should all have "morally the same rights".

Between us, Mr Betty and I, over a period of some several years, have racked up five redundancies. He's in the lead, 3-2, but that's neither here nor there. We've been fortunate in that our redundancies have never coincided, so one of us was working whilst the other was unemployed. When IN employment, both of us were higher rate taxpayers, which meant we were also paying higher rates of N.I. Now, let me be absolutely clear about this....I had no problem whatsoever with the levels of tax and NI I was paying. It's right and proper and all the rest of it. However, turns out that it's almost impossible to get any sort of benefit when you're made redundant if you have a spouse who's working, and if you have personal resources to fall back on, even if you've actually paid MORE into the system than other people.  So, morally, I didn't have the same rights as someone who earned less than me, or as (for example) a couple where the wife had decided to stay at home. Was that wrong? Not in my opinion.

[Russethouse]

I'm with Betty...plus this - both my adult children still live at home and frankly stand little chance of buying a home of their own, would I rather the government did something to help first time buyers  rather than help those that left the Uk years ago, yes, because that sort of scheme would generate growth and make work.

My mother still lives at home and has carers four times a day (she is immobile and relys totally on them) At present she is a 'private funder', but when those funds run out it is very unlikely that she will be funded for enough care to remain in her home - my father left school at 15, served in WW2 and worked and paid tax until he was 76, my mother also worked and paid tax, so guess where I'd rather the money was spent.

Is it fair that if they hadn't worked they would get government funded care, free of charge ?

The system is full of inequalties, and an inequality for a group not residing in the UK is going to take lesser precedence IMHO.

There are so many things in the UK where funding is  being cut back that I can't see this group getting rises reinstated in my life time

 

[cooperlola]

[quote user="You can call me Betty"][quote userI'm not bitter, angry, upset or insert any other adjective of your choice, but, veering tangentially back to the OP, I would like to ask whether the "older generation" might consider what THEY could do to ease the burden on these younger people, rather than increase it, even if only fractionally, by insisting on a few extra quid in their own pockets each month. I know that's a comment that will almost certainly enrage some, but how much more do people think the younger generation really CAN pay?????
[/quote]I would be very happy if my state old aged pension were to be means tested based on my earnings (ie if I still had a part time job or my occupational pension were above a certain level), but not if it's frozen merely because I no longer live in the EU - that seems daft to me.  I also pay tax on my pension so I do contribute to the exchequer here at least, plus those with public sector pensions still pay tax in the UK and will do so until they pop their clogs.

[NormanH]

[quote user="You can call me Betty"]And you obviously think that I, and those who still live and pay taxes in the UK despite being on incomes which are (well, mine is..) actually going down both in actual monetary terms AND value should be delighted to subsidise people living in Canada, whilst we see every area of public service and publicly funded provision being cut..

It appears that you either don't want to address the other questions I raised earlier, but I will address your idea that people should all have "morally the same rights".

Between us, Mr Betty and I, over a period of some several years, have racked up five redundancies. He's in the lead, 3-2, but that's neither here nor there. We've been fortunate in that our redundancies have never coincided, so one of us was working whilst the other was unemployed. When IN employment, both of us were higher rate taxpayers, which meant we were also paying higher rates of N.I. Now, let me be absolutely clear about this....I had no problem whatsoever with the levels of tax and NI I was paying. It's right and proper and all the rest of it. However, turns out that it's almost impossible to get any sort of benefit when you're made redundant if you have a spouse who's working, and if you have personal resources to fall back on, even if you've actually paid MORE into the system than other people.  So, morally, I didn't have the same rights as someone who earned less than me, or as (for example) a couple where the wife had decided to stay at home. Was that wrong? Not in my opinion.

[/quote]

'Subsidise people living in Canada' could also be phrased   'pay for the pensions of retired British people who contributed during their working lives on the understanding they would themselves receive a pension in old age'

'incomes which are  actually going down both in actual monetary terms'  I doubt that anyone working in the UK has seen the erosion of income that people on living pensions in France , even supposedly index-linked ones,  have experienced with the collapse of the pound

[YCCMB]

Coops, it may, indeed, be "daft"...but regrettably them's the breaks. It's unfortunately a bit like the regular gripe about the winter fuel allowance.

When push comes to shove, and again, I'm willing to hear counter-arguments, the decision to move anywhere abroad is a lifestyle choice, and hopefully an informed decision made after detailed research. I'd like to bet that of the half million people supposedly affected by this, there are only a tiny proportion to whom it came as a total surprise, given that, as I said earlier, this has apparently been the status quo for at least the last 40 years. Of course, in a worldwide recession where the vast majority have been hit in the pocket one way or another, most people are looking for ways to increase their dwindling income. Even many of the comments on different websites I've looked at often seem to trot out the arguments about pensioners "being penalised because of where they choose to spend their retirement". It would appear they made an informed choice, many of them doing so a long time ago. So why now? Because understandably it's a financially difficult time for everyone. But thus, it's also probably the best possible time to ensure that the demands fall on selectively deaf ears.

[allanb]

[quote user="You can call me Betty"]And you obviously think that I, and those who still live and pay taxes in the UK despite being on incomes which are (well, mine is..) actually going down both in actual monetary terms AND value should be delighted to subsidise people living in Canada, whilst we see every area of public service and publicly funded provision being cut..[/quote]No, I don't think that at all.

The only question I'm arguing about is this: given that the state is committed to provide a non-means-tested pension, based on age, determined in sterling, and adjusted annually on the basis of a specified price index, should certain people be denied the adjustment solely because of where they live?

I see it as a yes-or-no question, although you proposed an in-between answer, namely that they should get an adjustment, but that it should be related to their local currency.  I don't think that is logical and I've tried to explain why.

However, I'm not arguing about the rights and wrongs of pension indexation, or whether state pensions should be funded (and if so, how), or whether a pension should be means-tested or linked to other benefits like health care, or whether you should get unemployment benefit if you have a working spouse.  All of these are important and interesting questions, but I don't think they're relevant to the topic. 

[YCCMB]

[quote user="allanb"]

However, I'm not arguing about the rights and wrongs of pension indexation, or whether state pensions should be funded (and if so, how), or whether a pension should be means-tested or linked to other benefits like health care, or whether you should get unemployment benefit if you have a working spouse.  All of these are important and interesting questions, but I don't think they're relevant to the topic. 

[/quote]

But unfortunately, this brings us back to what's being asked, which is for the current legislation to be changed without regard for, or reference to the wider picture.

Norman. I repeat, I'm not complaining...but compared to 8 years ago, when last I was made redundant, I'm now earning approximately 10% of (note, not 10 less than, but 10% of) what I was earning then. And it's getting less (in cash terms) year on year. As things stand at the moment, I, like any of my contemporaries still working, am contributing as I have done all my working life, on what might now be considered the offchance that I'll live long enough (and be able to retire soon enough) to get any benefit at all from my contributions. You and your contemporaries may be the last generation to have had the luxury of any sort of proper state-subsidised retirement I've been working and contributing now for my "alloted" 30 years, but am still another 11 years from the date where (under present conditions) I can expect anything at all in the way of a state pension. And Coops has already made reference to the fact that many private pension schemes are hardly financially buoyant, I wonder who's going to listen to my generation's complaints when our time comes around? And the "collapse of the pound" issue sort of brings us full circle to the exercising of personal choice regarding where one lives when one retires...

[NormanH]

So  would you prefer that all these old people whom you subsidise return to the UK, become a burden on the Social services and the NHS,  and  start getting their pensions index-linked ?

Would that satisfy what sounds like jealousy of their 'lifestyle choice' ?

I believed there to be a sort of contract under the welfare states that the older generation pay(subsidise?)  for the education and welfare of the younger, then in their turn the younger pay for the older in their retirement.

The first part of this seems to have worked for you in that at times you as a couple have  earned enough to pay tax at a higher rate. Those working in the 70s didn't have an easy time either paying for you.

My wife didn't have a washing machine until the birth of her third child, we never had a new car, and none of the frippery of Kitchen/Bathrooms etc now considered essential by the victims of advertising and Lifestyle TV and Sunday supplements,

These 'luxuries' seem to have been the lifestyle choice of a recent generation that has spent rather than saved for retirement, and this has  created the debt burden.

Now that times are becoming hard again you seem to resent paying back your half of the bargain...

You see my problem with this is that I feel that there is an underlying

and long-standing intention on the part of the Conservatives to

dismantle and abolish the welfare state.

The nasty part (who own the means of production and have the capital) have conned the rest again

[YCCMB]

[quote user="NormanH"]So  would you prefer that all these old people whom you subsidise return to the UK, become a burden on the Social services and the NHS,  and  start getting their pensions index-linked ?

Would that satisfy what sounds like jealousy of their 'lifestyle choice' ? Wow, Norman, that's a low blow

I believed there to be a sort of contract under the welfare states that the older generation pay(subsidise?)  for the education and welfare of the younger, then in their turn the younger pay for the older in their retirement.

The first part of this seems to have worked for you in that at times you as a couple have  earned enough to pay tax at a higher rate. Those working in the 70s didn't have an easy time either paying for you.You might have overlooked the bit where I clearly stated that I didn't have the slightest problem with paying my full whack, so I'll just reiterate that. Thing is, my generation (and I started work in the 70's too, BTW) has paid and is paying not only for the previous generation but the next one too. At least, those of us with children are.

My wife didn't have a washing machine until the birth of her third child, we never had a new car, and none of the frippery of Kitchen/Bathrooms etc now considered essential by the victims of advertising and Lifestyle TV and Sunday supplements,

These 'luxuries' seem to have been the lifestyle choice of a recent generation that has spent rather than saved for retirement, and this has  created the debt burden. We couldn't afford 3 children!!!

Now that times are becoming hard again you seem to resent paying back your half of the bargain...No, far from it. What I have an issue with (and it's not resentment) is that I think this is the wrong time for the wrong fight. Just like I haven't yet been convinced that any interest group who is agitating for "special interest" status in the current economic climate has quite grasped the fact that everyone (except the very rich) is struggling

You see my problem with this is that I feel that there is an underlying

and long-standing intention on the part of the Conservatives to

dismantle and abolish the welfare state.Well, you may have a point, but as I'm not a Conservative I can't accept responsibility. Although if your argument is with the political decisions of the Tories, then venting your spleen at me and accusing me personally of jealousy and resentment is rather an unworthy way to get at them

The nasty part (who own the means of production and have the capital) have conned the rest again

[/quote]

[woolybanana]

[quote user="NormanH"]So  would you prefer that all these old people whom you subsidise return to the UK, become a burden on the Social services and the NHS,  and  start getting their pensions index-linked ?
Would that satisfy what sounds like jealousy of their 'lifestyle choice' ?

I believed there to be a sort of contract under the welfare states that the older generation pay(subsidise?)  for the education and welfare of the younger, then in their turn the younger pay for the older in their retirement.
The first part of this seems to have worked for you in that at times you as a couple have  earned enough to pay tax at a higher rate. Those working in the 70s didn't have an easy time either paying for you.

My wife didn't have a washing machine until the birth of her third child, we never had a new car, and none of the frippery of Kitchen/Bathrooms etc now considered essential by the victims of advertising and Lifestyle TV and Sunday supplements,
These 'luxuries' seem to have been the lifestyle choice of a recent generation that has spent rather than saved for retirement, and this has  created the debt burden.

Now that times are becoming hard again you seem to resent paying back your half of the bargain...

You see my problem with this is that I feel that there is an underlying and long-standing intention on the part of the Conservatives to dismantle and abolish the welfare state.

The nasty part (who own the means of production and have the capital) have conned the rest again


[/quote]

Norman, the possession of TV's and washing machines was pretty widespread in the 1970s and beyond as was ownershuip of TVs. I think you are being very disingenuous because of your hatred of anything not controlled by the massively wasteful, centrally controlled machines of Socialism which impoverish the greatest number and kill initiative.

However, let us remember that New Labour had ten years to right the wrong of reduced pensions for those living abroad, largely in the old dominions and fought tooth and nail not to do so!

Now, if you really want a wrong to right, then the question of paying heating allowances to non-residents is another matter.

[Pommier]

It seems fair to me to not pay the heating allowance to anyone living outside the UK, but I do think that if someone worked and paid tax and NI in the UK then they should receive the same index linked pension wherever they choose to live in retirement.

Most pensioners who move to Commonwealth countries are going there because that's where their children/grandchildren live (they wouldn't be allowed in otherwise!). Would it be preferred for them to stay alone and lonely in the UK being a burden on the state?

This doesn't affect me personally as I don't know anyone in this position. It just seems very unfair.

[YCCMB]

[quote user="Pommier"].

Most pensioners who move to Commonwealth countries are going there because that's where their children/grandchildren live (they wouldn't be allowed in otherwise!). .[/quote]

Not strictly the case...have a look at this link then tell me how sorry you feel for people who fall into this category:

[URL]http://www.immi.gov.au/visitors/retirement/405/[/URL]

[Rabbie]

[quote user="Pommier"]It seems fair to me to not pay the heating allowance to anyone living outside the UK, but I do think that if someone worked and paid tax and NI in the UK then they should receive the same index linked pension wherever they choose to live in retirement. Most pensioners who move to Commonwealth countries are going there because that's where their children/grandchildren live (they wouldn't be allowed in otherwise!). Would it be preferred for them to stay alone and lonely in the UK being a burden on the state? This doesn't affect me personally as I don't know anyone in this position. It just seems very unfair.[/quote]It is unfair but life is unfair. The rules about pensions payable to people abroad have been around for a long time so people should have been aware of the situation before they chose to retire abroad.

[Pommier]

[quote user="You can call me Betty"][quote user="Pommier"]. Most pensioners who move to Commonwealth countries are going there because that's where their children/grandchildren live (they wouldn't be allowed in otherwise!). .[/quote]

Not strictly the case...have a look at this link then tell me how sorry you feel for people who fall into this category:
[URL]http://www.immi.gov.au/visitors/retirement/405/[/URL]
[/quote]

I can't believe that many people fall into this category: this is for seriously rich people!

Anyhow, I still believe that having paid in, they are entitled to receive the same pension they would have received in the UK. Otherwise you're on the start of the slippery slope to means tested pensions.

 

[Judith]

[quote user="woolybanana"]

Norman, the possession of TV's and washing machines was pretty widespread in the 1970s and beyond as was ownershuip of TVs. I think you are being very disingenuous because of your hatred of anything not controlled by the massively wasteful, centrally controlled machines of Socialism which impoverish the greatest number and kill initiative.

H[/quote]

Not so - when I married in the early 70's we managed a new bed and a new cooker ('cos I said I wasn't going to have any old ones for those).  We had no TV for several years (hence I cannot answer quiz questions on the 70's - and I hated the music too)  and I was given my grandma's old washing machine ..... it leaked, and it took us a year to manage to replace it ....

Whilst I agree that those who moved to certain countries perhaps knew about the freezing of pensions, if you have worked in the UK all your life and you go to join your family when you retire (as I suspect is often the case), I do not see why in those circumstances, that the pension should not be increased as with the EU and other "linked" countries.  If they've lived and worked there - it's different.  If you paid into the system, for the correct no of years, and for most of us that was 40+, not like the 30+ now required, I do not see why the pensions should not also increase.  There will always be exceptions, but it does seem some leeway needs to be applied .....