· New DWP estimates suggest 510,000 recipients of the UK state pension living abroad do not benefit from the ‘triple-lock’, which increases the payment by the highest of average earnings, CPI inflation or 2.5%
· Uprating state pensions for these people would cost the Government £3 billion over the next 5 years
· Savers with frozen state pensions could miss out on more than £50,000 over the course of their retirement*
· Majority of those affected live in Australia, Canada or New Zealand
Tom Selby, senior analyst at AJ Bell, comments:
“Over half a million people are understandably furious that, having paid into the system and retired abroad, they find their state pensions frozen.
“Over the course of someone’s retirement this could have a huge impact, potentially costing more than £50,000 in state pension income. For many this might be the difference between living comfortably and struggling to make ends meet.
“Unfortunately for those affected there is no sign of a reprieve, with successive Governments rejecting calls to rethink the policy and preferring instead to focus resources on those who choose to remain in the UK.
“In fact the problem could get a whole lot worse in the event of a No Deal Brexit. At the moment UK citizens retiring to countries like Spain and France benefit from state pension increases through a reciprocal deal with the EU as a whole.
“If the UK leaves the EU without a deal the Government has only committed to uprating state pensions for people living in EU member states in 2019/20. Beyond this point these increases will depend on a reciprocal deal being struck, either with the EU or individual member states.”
*Calculation assumes individuals receive the full flat-rate amount of £8,546.20 per year, with annual increases of 2.5% over 20 years.