Pensions: Reciprocal Uprating Agreements

House of Lords written question – answered on 26th October 2005.

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Photo of Lord Oakeshott of Seagrove Bay Lord Oakeshott of Seagrove Bay Spokesperson in the Lords, Treasury, Spokesperson in the Lords, Work & Pensions

asked Her Majesty's Government:

Which are the countries with whom they do not have reciprocal agreements on social security; when negotiations last took place on reciprocal agreements with each of these countries; how each country treats the pension entitlements of its own retired citizens in the United Kingdom; and what pension-related benefits are available to United Kingdom pensioners resident in each of these countries; and

How many United Kingdom pensioners are resident in each country without reciprocal agreements on social security; and how many pensioners from each country without reciprocal agreements on social security are resident in the United Kingdom; and

In relation to the pensions of British citizens retiring to countries without reciprocal agreements on social security, for each country, what is the estimated cost of indexing those pensions from now on (a) for each of the next five years; (b) in 2015; (c) in 2020; and (d) in 2030.

Photo of Lord Hunt of Kings Heath Lord Hunt of Kings Heath Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

The table below shows the numbers of UK state pensions paid to people residing in countries outside the European Economic Area and with which the UK does not have a reciprocal social security agreement covering uprating of UK state pensions

Country Number of UK

state pensions paid

Afghanistan 1
Albania 9
Algeria 7
Andorra 201
Anguilla 142
Antigua 426
Antilles (Netherlands) 31
Arab Emirates (United) 256
Argentina 238
Ascension Island 5
Australia 236,851
Bahamas 235
Bahrain 64
Bangladesh 2,682
Barbuda 4
Belize 53
Benin 4
Bhutan 1
Bolivia 25
Botswana 131
Brazil 498
Brunei 14
Bulgaria 59
Burkina Faso 2
Burma 3
Cameroon 12
Canada 151,230
Cape Verde Islands 6
Cayman Islands 104
Central African Republic 2
Chad 1
Chile 173
China Peoples Republic 112
Colombia 84
Congo 2
Cook Islands 7
Costa Rica 48
Cote D'Ivoire 2
Cuba 6
Democratic Republic of the Congo 2
Djibouti 100
Dominica Commonwealth 1,099
Dominican Republic 35
Ecuador 44
Egypt 156
El Salvador 9
Ethiopia 27
Falkland Islands and Dependencies 38
Faroe Islands 8
Fiji 75
Gambia 76
Ghana 778
Greenland 1
Grenada 1,514
Guatemala 9
Guinea 2
Guyana 438
Haiti 1
Honduras 8
Hong Kong 1,097
India 4,139
Indonesia 86
Iran 15
Iraq 7
Japan 324
Jordan 47
Kampuchea 6
Kenya 593
Kiribati 3
Kuwait 40
Lebanon 59
Lesotho 7
Liberia 2
Libya 2
Macau 10
Malagasy Republic 6
Malawi 86
Malaysia 446
Maldive Islands 2
Mexico 301
Monaco 293
Mongolia 2
Montserrat 143
Morocco 86
Mozambique 3
Namibia 41
Nepal 25
Nevis St Kitts 503
New Caledonia 4
New Zealand 44,965
Nicaragua 7
Niger 1
Nigeria 2,410
Norfolk Island 8
Oman 51
Pakistan 4,969
Panama 21
Papua New Guinea 16
Paraguay 21
Peru 90
Qatar 27
Republic of Armenia 2
Republic of Azerbaijan 2
Republic of Belarus 20
Republic of Kazakhstan 1
Republic of Kyrgyzstan 1
Republic of Moldova 3
Republic of Tajikistan 1
Republic of Turkmenistan 2
Republic of Uzbekistan 2
Republic of Yemen 2,779
Romania 22
Rwanda 1
San Marino 1
Sarawak 2
Saudi Arabia 140
Senegal 7
Seychelles 90
Sharjah 1
Sierra Leone 96
Singapore 279
Solomon Islands 8
Somalia 48
South Africa 36,558
South Korea 14
Sri Lanka 586
St Helena and Dependencies 71
St Lucia 1,370
St Martins 1
St Vincent and Grenadines 812
Sudan 4
Surinam 3
Swaziland 94
Syria 24
Tahiti 2
Taiwan 17
Tanzania 56
Thailand 1,019
The Russian Federation 87
Togo 7
Tonga 10
Trinidad and Tobago 1,257
Tunisia 23
Turks and Caicos Islands 19
Uganda 65
Ukraine 228
Uruguay 33
Vanuatu 21
Venezuela 79
Vietnam 9
Virgin Islands (British) 47
Western Samoa 7
Zambia 178
Zimbabwe 2,809

Source:DWP caseload data—October 2005

Although most reciprocal agreements provide for payment of upratings, that is not their primary purpose. They are intended mainly to provide a measure of co-ordination between social security schemes to protect the social security of workers moving between the two countries during their working lives. They prevent employees, their employers and the self-employed having to pay social security contributions to both the home state and the state of residence at the same time.

From 1981 to the present day, successive UK governments have taken the view that no new commitments should be entered into to seek to negotiate new agreements with other countries that would include provision for the payment of social security, benefits to persons abroad, including the uprating of UK state pensions abroad. Most of the UK's existing agreements are in fact consolidations of earlier long-standing ones and were entered into with a view to administrative improvements and efficiencies and also to take into account developments and changes to both countries' schemes over time, rather than to extend the scope for payment of increased amounts of benefits abroad.

As shown in the table above, the UK state pension is paid to over half a million people residing in over 100 different countries outside the EEA with which the UK does not have a reciprocal social security agreement covering uprating of the state pension. Around 90 per cent of these overseas pensioners reside in Australia, Canada, New Zealand or South Africa.

Only limited information is available on the rules applicable to the export of pensions from these four countries. Such information as is available is as follows:

In Australia, the tax-funded, residence-based age pension is payable outside Australia but only if it was claimed while the person was resident in Australia; it cannot be claimed from outside Australia other than from a country with which Australia has a reciprocal agreement. In contrast the UK state pension can be claimed from anywhere in the world.

In Canada, benefits under the contributory Canada pension plan are payable to people who live outside Canada and are uprated once a year in January. The residence-based, tax-funded old age security pension can be paid indefinitely outside Canada provided the pensioner has lived in Canada for at least 20 years after reaching 18 years of age.

The arrangements in New Zealand are that the tax-funded New Zealand superannuation is generally payable outside New Zealand at 50 per cent of the rate payable in the country. As with Australia, it is paid only to people who claimed the pension while resident in the country. However, the rate payable to those moving to a country with which New Zealand has a reciprocal agreement will depend on the terms of the agreement.

There is no universal contributory pension scheme in South Africa. However there are some income-tested social security benefits, including social pensions for the elderly. Payment is subject to a stringent income test, meaning that only those at the bottom of the economic scale are entitled to receive benefits, which are generally uprated once a year, usually in April. The benefits are not payable outside South Africa.

The table below shows the estimated costs of uprating state pensions paid to people residing in countries where it is not currently uprated.

Year Additional cost of uprating
2005–06 £20,000,000
2006–07 £50,000,000
2007–08 £70,000,000
2008–09 £100,000,000
2009–10 £130,000,000

Source: Forecast expenditure figures based upon DWP retirement pension administrative data, HM Treasury short-term retail prices index forecasts and GAD overseas pensioner forecasts.

Reliable long-term estimates are not available. However, the costs would increase significantly over future years.

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