Commonwealth - Motion to Take Note

Part of the debate – in the House of Lords at 2:16 pm on 16th March 2017.

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Photo of Baroness Benjamin Baroness Benjamin Liberal Democrat 2:16 pm, 16th March 2017

My Lords, I declare an interest as a vice-president of the Royal Commonwealth Society, and I thank the noble Baroness, Lady Anelay, for securing this important debate. I am a great admirer of her work at the Foreign and Commonwealth Office and I appreciate her personal commitment to strengthening the Commonwealth, which is very close to my heart. That commitment will surely only gain in importance as Britain looks to a new future outside the EU. However, I raise an issue on which I would like a change of approach from the Government ahead of the Commonwealth Heads of Government Meeting next year. That issue is frozen British state pensions, about which I have spoken several times in this House.

The freezing or active exclusion of some British people who live overseas from the annual uprating adjustments to state pensions is a national shame and a great injustice. It could affect any British citizen. The impact is predominantly felt by recipients living in the Commonwealth. In fact, of the 550,000 British state pensioners living with a frozen pension worldwide, 520,000 live in the Commonwealth. That includes 247,000 in Australia, 144,000 in Canada, 65,000 in New Zealand and 36,000 in South Africa. There are substantial numbers in other countries too—India, Pakistan, Nigeria, Malaysia, Antigua, St Lucia, Montserrat and other overseas British territories. The list goes on and on.

Let us be very clear. As a country, we, like other modern nations, rightly recognise that entitlement to a state pension should continue when a person moves overseas. That entitlement is linked to national insurance contributions made over the years, not to place of residence. But Britain is currently alone in our uniquely inconsistent approach when it comes to uprating policy. While our pensioners at home benefit from the triple lock, our pensioners overseas face a bewildering lottery of entitlement. Those who live in the EU, or more accurately the EEA, are protected by the social security provisions of the single market, and continue—at least for now—to get their pensions uprated as they would at home. So too do those living in a handful of other countries, including America, Turkey, Israel and the Philippines, where historic bilateral arrangements are in place. But for British pensioners living in most of the Commonwealth, their state pensions are frozen, with recipients destined to receive the same weekly rate for as long as they remain overseas.

One of the greatest benefits of the Commonwealth to Great Britain is surely the continuing economic and cultural ties that the countries in it have with the United Kingdom, and vice versa. Generally, what has preserved these links has undoubtedly been the historic and continuing movement of people. But many British people who decide to leave the UK and retire elsewhere—for a variety of reasons—are in for a nasty shock. In the Caribbean, for example, one of the biggest constant issues that British high commissioners have to deal with is that of frozen pensions.

I know from my correspondence bag that mild bewilderment quickly turns to an understandable anger and resentment when those who have worked all their lives in the UK discover, often only after having moved overseas, that they will be landed with a frozen pension. It does not take great intelligence to work out the impact of pension freezing: incomes fall in real terms year-on-year. For the first few years it is an inconvenience but, as time goes by, it is a more serious concern. I met an 85 year-old recently who had had their state pension frozen since their retirement to Canada in 1998. At that time the state pension was £64.70 a week, and that is therefore what he continues to receive to this day. He is £25,000 poorer today than he would have been with an uprated pension and now, understandably, struggles to get by on his own income without the support of his family. He is, sadly, not alone. There are many older—and, as a result, poorer—frozen pensioners out there.

It really is a myth that all Brits who live overseas are wealthy. On the contrary, many rely on their state pension income just as they would at home. People migrate for many different reasons—sometimes for work, sometimes for health reasons, and often to be closer to their families, to help with grandchildren. The last thing they want to be is a financial burden, but without an uprated pension, frozen pensioners are losing their independence and facing pensioner poverty, which should shame us all.

We are invited today to debate how the UK might strengthen its relationship with the Commonwealth. It is a credit to the Minister that relations with the countries of the Commonwealth are generally so friendly. But the noble Baroness will be aware that frozen pensions remain a rare diplomatic grievance and that many Commonwealth leaders are openly puzzled by our approach to our own citizens abroad. We will need to do trade deals with these countries in the next few years, and this issue is likely to be raised time and again in this context.

I did not want to mention the “B” word in this debate, but there is no way to avoid it. The Brexit process is also likely to bring the frozen pension issue to the fore. Many of the 492,000 retired British expats living in the EEA are increasingly concerned that the Government have not provided more reassurance to them. They are living in fear that, without the legal protections of the single market, they too will end up with frozen pensions like their Commonwealth counterparts. In fact, when I asked the noble Baroness, Lady Altmann, about this matter in the House last year, she was very clear that state pensions are uprated,

“only where we have a legal requirement to do so”.—[Official Report, 24/2/16; col. 251.]

My understanding, therefore, is that the Government will now either need to determine a legally binding social security deal as part of the exit package or be forced to act unilaterally to maintain uprating rights for EU-resident British pensioners. Either way, I propose that the Government should take this opportunity—when so much else is up in the air—to take a more fundamental look at their approach to payment of the state pension overseas. A modern, global Britain should surely recognise that the movement of its people is a good thing. A modern state pension system should recognise, support and encourage this, especially at a time when our ageing population is putting increasing strains on public services here at home.

In the case of the Commonwealth, with increasing numbers of those who came to the UK in the 1950s, 1960s and 1970s now considering a return in their retirement years, there is surely an obligation not to penalise them, while allowing full rights elsewhere. Many of them helped to make Britain great over the years. The Commonwealth will surely be stronger if Britain recognises that it cannot expect only to enjoy the benefits of membership when it needs it, but that it must also meet its obligations when people move the other way. Will the Government consider putting right this injustice as soon as possible? I believe that change on this issue is possible and would be the right thing to do, as it would do much to strengthen Commonwealth relations in years to come. This should be part of our legacy for our Commonwealth family. I look forward to hearing what the Minister has to say on this issue.

Annotations

Jane Davies
Posted on 17 Mar 2017 3:01 pm (Report this annotation)

Thank you Baroness Benjamin for again bringing up the frozen pension scandal, that this injustice is still happening after decades should be a source of shame to the government. The lottery of this theft of seniors pension increases beggars belief, there is no logic to it at all. I remember after the Falklands war the government of the day encouraged British citizens to relocate there, no doubt to increase the numbers of Brits and I know of at least one family who did that, but I'm willing to bet my best boots they were never told that their state pension would be frozen at the first payment. An absolute outrage......this must end and end NOW.

Andy Robertson-Fox
Posted on 18 Mar 2017 8:24 am (Report this annotation)

Indeed, thank you Baroness for yet again highlighting the illogical and irrational frozen pension policy which, as you are aware, affects not only pensioners in Commonwealth countries but many others living in, for example, Thailand, Indonesia, Mexico and, increduously, the British Territory of the Falkland Islands.
No doubt you were surprised by the somewhat curt brevity of response by Baroness Mobarik but more so by the revelation that the "uprating of pensions for people living abroad was government policy."
Perhaps, Baroness Benjamin, you would wish to raise with her why the government is not following the policy she has stated?

Brian Corrigan
Posted on 18 Mar 2017 12:35 pm (Report this annotation)

Excellent speech.