Clause 20 - Overseas residents

Part of Pensions Bill – in a Public Bill Committee at 12:30 pm on 4 July 2013.

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Photo of Sheila Gilmore Sheila Gilmore Labour, Edinburgh East 12:30, 4 July 2013

I think all of us, even before the introduction of the Bill, have encountered the considerable campaign being run by people who feel aggrieved because they have not benefited from uprating over a fairly lengthy period. It is easy to say, “They chose to go abroad, so on their own heads be it,” but the e-mails and letters that I have received have given me a sense that people feel particularly aggrieved about the anomalies in the system. If the rules were the same for everybody who drew their pensions abroad, I am sure that people would still feel sometimes that things were difficult but they would not perceive any unfairness between different groups.

Obviously, the issue is an historical one, and it is the result of reciprocal agreements made by previous Governments. I understand that it is a long time since any such agreements were entered into. Will the Minister explain why that is? Some of the countries with which agreements have been made come as quite a surprise, and there does not seem to be any pattern to them. I suspect that it depends on where the other countries are coming from. I imagine that some of the pensioners who are affected retired to what they probably saw as sister countries, or countries from the Commonwealth family, assuming that they would benefit from uprating, whereas in fact those who retired to other countries such as the United States are the ones who get the advantage of uprating.

Not all of those living in Britain who have made their contributions and retired will necessarily be paying tax, although some certainly will, while those who are overseas generally will not be. The payment of tax in this country is not necessarily a criterion that determines whether an individual’s pension is uprated. Whether it is uprated or not, or the extent to which it is uprated, depends on policy in this country.

My hon. Friend on the Front Bench was treated to a degree of lecturing from the Minister about the perils of responding to lobbying groups and outside agencies and giving them the impression of being supportive. The Minister must agree that others have been prone to that in the past. Indeed, I understand—he may correct me if I am wrong—that he took a rather different view  when he was in opposition, during which time he was quite supportive towards the lobbying groups, which may have made them anticipate even more strongly a potential breakthrough in their campaign. I understand that the Minister told some of the campaigners:

“I agree that pensioners who earned their pensions by paying national insurance contributions have a strong case for the value of that pension being maintained in line with inflation, and I am actively seeking such a change. As you may be aware, there is currently a Pension Bill”— this is in 2004—

“passing through Parliament. I will take this opportunity to table an amendment, seeking to uprate the ‘frozen pensions’ of expatriates.”

If that was the Minister’s view then, he has clearly changed his mind. The experience of office—of being in the Administration—can certainly lead one to realise that these things are not as simple as one thought. I make that point—the Minister himself mentioned the positions previously taken by the Opposition—to show that this is a trap into which one can fall.

Latterly, some people have tried to argue that their lack of residence and, therefore, their lack of a claim to services that they might otherwise be claiming should be taken into account and offset against the cost of increasing their pensions. Without figures, it is difficult to judge whether there is something to that argument. I have certainly received e-mails from individuals saying, “If we all came back, there would be additional costs. You should take that into account.” I am not sure whether people would necessarily come back, and there are probably strong reasons for people wanting to live out their retirement abroad. Those might include family reasons, and people might have moved to be closer to their children or to other members of their families. They may be sun-chasers—people who feel they will have a more pleasant style of living, given Britain’s relatively temperate climate.