It certainly does seem anomalous that expat retirees living in the EU or the United States receive the current state pension of £115, while those living in Australia, Canada and elsewhere receive only £67.50, particularly as many of those missing out have made contributions for the duration of their working lives.
And, although unfreezing the state pension for expats would cost nearly £600 million in the first year, the cost would dramatically reduce over subsequent years and is more than offset by the savings the government makes in not having to pay for the expats’ healthcare on the NHS.
Moving abroad: Pensioners living in EU countries and the US are among those who get their full state pension, but those living in many other countries have them frozen.
The rules mean that someone could have paid into the system their whole life, but would still receive a reduced state pension simply because they choose to retire abroad to one country over another.
However, the Department for Work and Pensions indicated that it has no plans to change the system. “We have a very clear position on this policy – which has remained consistent for around 70 years: the UK state pension is payable worldwide but is only uprated abroad where we have a legal requirement to do so or a reciprocal agreement is in place. There are no plans to review this,” commented a spokesperson with the DWP.
Of course, although those with considerable expat regular savings may be well-insulated from the pensions freeze, there are some for whom a reduced pension may mean certain hardships.
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Time may be running out for British retirees to move to Portugal in order to take advantage of its valuable Non-Habitual Resident tax programme. Currently, talk abounds that the scheme will come to an end in 2018 and be replaced with a 10% net expat tax regime from the first day of the New Year. Luckily, for those who feel they may be tempted by a move to Portugal, any move before this cut-off date will ensure that they are able to enjoy the benefits of NHR status as they currently stand.