UK pensioners receiving £6.75 a week; calls to suspend Commonwealth status

By Financial News
UK pensioners receiving £6.75 a week; calls to suspend Commonwealth status

Campaigners are calling for the UK’s suspension from the Commonwealth until all British expatriates receive inflation-linked pensions.

The action group says the current state of affairs is a persistent violation of the government’s commitment to the Commonwealth charter, which states its support of political, social and economic equality.

All government parties since campaigners began addressing the issue have repeatedly ignored calls to change the legislation.

The problem

To give a brief example, a British pensioner living in Canada aged 90 receives one-third of the pension of a similar British pensioner living in the USA.

Elder pensioners also take a hit against younger pensioners – who benefit from better levels of inflation at the time of their retirement.

The problem is due to the lack of countries which have signed bilateral agreements with the UK. Countries such as France, Spain and the US have all signed such agreements, meaning expats receive the same state pension as UK residents; currently set at £110.15 a week.

In other jurisdictions, such as Canada, Pakistan, Hong Kong, South Africa and Australia, pensions are frozen at the level they were when the individual first started receiving payments. The BBC reports some of these individuals receive as little as £6.75 a week.

The difference stems from the reforms carried out in post-war Britain by Clement Atlee, in a time when far fewer pensioners retired abroad and general wealth was much lower.

The state of things

It is estimated the cost of uprating all overseas pensions in line with inflation will be over £600 million a year for half a million British expatriates.

Yet until the problem is rectified, the British government faces mistrust at any new state pension scheme or legislation.

The official response has stated the government pays what is due under existing legislation and joint arrangements with the named countries.