For those who retire to live in Commonwealth countries such as popular destinations Australia, New Zealand and Canada, the state pension is frozen at the level it was on the day they permanently left the UK. Long-retired expat residents dependent upon the UK state pension income, can find themselves year-on-year becoming more and more disadvantaged. This is to the extent that some elderly people are being forced to return to the UK as life abroad becomes unaffordable.
In 2014, it was estimated that around 1.2 million pensioners lived abroad, accounting for 10% of total pensioners, but 46% of them have had their pension frozen. This means they are not entitled to annual increases in the state pension, known as up-rating, and are only entitled to the sum they were originally given at retirement, which means some are living on as little as £6 a week.
The government has been criticised for ignoring the plight of hundreds of thousands of pensioners living abroad who have had their state pension frozen, despite reforms to make pensions fairer in the UK. There has been a long campaign for this inequality to be addressed, supported by MPs of all parties. They point out that many have moved to be near relatives and had paid into the state pension for years. They could now be receiving a pension that can be as little as 25% of the figure they would have received if they had stayed in the UK.
Sources: www.ageuk.org.uk; www.telegraph.co.uk (Published articles: 2015/06/16 latest)