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Expats to lose out on new top up pension scheme
| Published: | 3 Apr at 6 PM |
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Over half a million UK state pensioners living in 150 world countries will get a worse deal than their UK-based counterparts if they buy into the government’s top-up pension plan.
Those retiring before 6 April 2014 will be unable to take advantage of the higher state pension of £155 per week payable from April 2006. Instead, they will be able to buy up to an extra £25 per week by giving the government £890 for each £1 weekly increase.
However, the 46 per cent of all expat pensioners living in countries where the state pension is frozen will not see the extra income rise along with inflation. Given that a retiree in say, Australia, would pay the government £22,890 for another £25 per week, he or she would have to live for 17 years after retirement in order to get the investment back.
Pensioners living in the UK will need to pay the same, but the extra £1300 a year would increase along with inflation and be worth £1623 after 10 years, based on inflation at 2.5 per cent. After 17 years, those not living in EEA countries, the USA, the Channel Islands and a few other countries would still be receiving the initial £1300 per year.
At present, it’s not being made clear what would happen to any balance should a pensioner die within the 17-year period. Pensioners who retired decades ago are at present receiving around £15 a week or even less, having paid in for a state pension over their entire working lives.
A long-standing campaign to end frozen pensions is now being backed by a new cross-party group of MPs, who are urging all affected pensioners to register to vote in next year’s General Election. PM David Cameron is ‘sympathetic’ to the plight of expats with frozen pensions, although it’s generally felt that, as pensioners overseas rarely vote, they can be ignored.
Those retiring before 6 April 2014 will be unable to take advantage of the higher state pension of £155 per week payable from April 2006. Instead, they will be able to buy up to an extra £25 per week by giving the government £890 for each £1 weekly increase.
However, the 46 per cent of all expat pensioners living in countries where the state pension is frozen will not see the extra income rise along with inflation. Given that a retiree in say, Australia, would pay the government £22,890 for another £25 per week, he or she would have to live for 17 years after retirement in order to get the investment back.
Pensioners living in the UK will need to pay the same, but the extra £1300 a year would increase along with inflation and be worth £1623 after 10 years, based on inflation at 2.5 per cent. After 17 years, those not living in EEA countries, the USA, the Channel Islands and a few other countries would still be receiving the initial £1300 per year.
At present, it’s not being made clear what would happen to any balance should a pensioner die within the 17-year period. Pensioners who retired decades ago are at present receiving around £15 a week or even less, having paid in for a state pension over their entire working lives.
A long-standing campaign to end frozen pensions is now being backed by a new cross-party group of MPs, who are urging all affected pensioners to register to vote in next year’s General Election. PM David Cameron is ‘sympathetic’ to the plight of expats with frozen pensions, although it’s generally felt that, as pensioners overseas rarely vote, they can be ignored.
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