Migration and the likely effect on my pension

[Fisher1]

Hi all

 

It's a sad fact of life as a UK pension recipient that my pension will be eroded by inflation over time if I go ahead with my planned move to Sydney. It's also maddening to know that other people migrating to different countries will have their pension increased annually to take account of inflation.

 

If you are / will be affected in this way, you may be interested to know that the InternationalConsortium of British pensioners are working to get the government to change their current stance on this issue.

 

Hansard online is currently providing a complete transcript of the debate in the House of Commons onMay 11th, on the issue of frozen pensions. It's an interesting read and gives a glimmer of hope that more MPs are getting behind the campaign to 'unfreeze' the state pensions of people living outside the UK.

[Parley]

Inflation is extremely low fortunately. In fact I think we had negative inflation last quarter.

[dmjg]

......that more MPs are getting behind the campaign to 'unfreeze' the state pensions of people living outside the UK.

 

Of course they are,

 

They obviously want to retire away from the uk, but cant handle the fact that their own, very generous, pensions will be eroded with inflation.

 

I cant say that many give a rats arse about the general riffraff of society they have screwed their whole career.

[starlight7]

Sadly they have been 'working' on this for over 20 years. Very slow workers. No progress and not likely to be. The British don't like people emigrating to Australia.

[Ken]

Sadly they have been 'working' on this for over 20 years. Very slow workers. No progress and not likely to be. The British don't like people emigrating to Australia.

 

It's the fact that the Australians refuse to pay the aged Pension to Australians living in the UK that the British don't like.

[dxboz]

Yes they do Ken - don't know what you are referring to?

[Guest]

Yes they do Ken - don't know what you are referring to?

I think Ken is probably referring to the fact that you can't claim an Australian age pension from the Uk. That means if you are already living in the Uk when you reach pension age and have worked the required years in Australia to claim you can't claim it from the Uk you have to move back to Australia to claim it. It's a crazy system when you can do so from other countries but the Uk is not one.

[VERYSTORMY]

I cant see it ever happening. The idea would not be at all popular with the majority of the public.

[Ken]

Yes they do Ken - don't know what you are referring to?

 

I was referring to Australians retiring in the UK. You need to have drawn the aged pension in Australia for 2 years before you can port it abroad.

[starlight7]

They're all nasty . Point scorers. Wonder if the UK did come out of the EU ( which they won't but still) if they might get a bit nicer to Australia?

[GeoffL]

FWIW, a Victorian friend told me that she couldn't stay longer than a certain time (I think it was six months) in UK otherwise the Australian Government would stop her pension entirely.

 

WRT the frozen pension issue, this has been the main factor that's kept us in UK for so long. Our son emigrated some years ago and we've always planned to follow him -- but I don't get to UK state pension age until next year, and so that's the first real opportunity to move for us. Even so, we'll need to rely on our son to make up the difference as our pensions get eroded by depreciation. If only he'd emigrated to the US, anywhere in the EU, the Philippines etc. and our pensions would be index-linked; but Oz, Canada, ... and the pension trap bites hard.

[Gbye grey sky]

FWIW, a Victorian friend told me that she couldn't stay longer than a certain time (I think it was six months) in UK otherwise the Australian Government would stop her pension entirely.

 

WRT the frozen pension issue, this has been the main factor that's kept us in UK for so long. Our son emigrated some years ago and we've always planned to follow him -- but I don't get to UK state pension age until next year, and so that's the first real opportunity to move for us. Even so, we'll need to rely on our son to make up the difference as our pensions get eroded by depreciation. If only he'd emigrated to the US, anywhere in the EU, the Philippines etc. and our pensions would be index-linked; but Oz, Canada, ... and the pension trap bites hard.

 

Why has the frozen pension issue delayed your move? Your pension entitlement will not change whether you emigrated 5 years ago or next year.

 

I wouldn't recommend any pensioner make the move if they are largely reliant on the state pension to make ends meet.

[GeoffL]

Why has the frozen pension issue delayed your move? Your pension entitlement will not change whether you emigrated 5 years ago or next year.

That's no longer true. The rules changed recently and I will qualify for state pension under the new 'flat rate' rules with a projected 150%-ish of what I'd be entitled to at state pension age if I emigrate before qualifying.

 

I wouldn't recommend any pensioner make the move if they are largely reliant on the state pension to make ends meet.

If only the basic state pension were affected... FWIW, my main source of income will be my occupational pensions. Unfortunately, these were earned in the armed forces and other government service. As these are considered 'state pensions', they are subject to the freeze.

[Fisher1]

That's no longer true. The rules changed recently and I will qualify for state pension under the new 'flat rate' rules with a projected 150%-ish of what I'd be entitled to at state pension age if I emigrate before qualifying.

 

 

If only the basic state pension were affected... FWIW, my main source of income will be my occupational pensions. Unfortunately, these were earned in the armed forces and other government service. As these are considered 'state pensions', they are subject to the freeze.

 

Hi GeoffL

 

Ive just read your note with some alarm. Are you saying that pensions paid by local government are also frozen on departure? This is something I wasn't aware of, and as a retired teacher it would presumably affect me.

[akiralx]

Of course they are,

 

They obviously want to retire away from the uk, but cant handle the fact that their own, very generous, pensions will be eroded with inflation.

 

I cant say that many give a rats arse about the general riffraff of society they have screwed their whole career.

 

Your post makes no sense - the MPs' scheme, like most occupational schemes, is indexed wherever you live - it is only the state pension that can be frozen for residents of certain countries.

 

I believe politicians are realising that a large number of expats pensioners are returning to the UK, unable to survive on a frozen pension, so that is costing the UK state in terms of aged care. It may be cheaper to unfreeze UK state pensions.

[akiralx]

Hi GeoffL

 

Ive just read your note with some alarm. Are you saying that pensions paid by local government are also frozen on departure? This is something I wasn't aware of, and as a retired teacher it would presumably affect me.

 

I don't think Geoff is correct - the Local Government Pension Scheme is not freezing pensions for overseas residents.

[Fisher1]

I don't think Geoff is correct - the Local Government Pension Scheme is not freezing pensions for overseas residents.

 

Phew! Thank you !

[winter1]

Hi GeoffL

 

Ive just read your note with some alarm. Are you saying that pensions paid by local government are also frozen on departure? This is something I wasn't aware of, and as a retired teacher it would presumably affect me.

 

I am receipt of a Local government pension and it is not frozen. The local government scheme also make up a small portion of the state pension if are subject to a State Pension Age deduction If you inform your provider you are overseas in a frozen country (this was part of an older system when some percentage of the occupational pension increase were paid in your state pension and not in your occupational one).

[Gbye grey sky]

That's no longer true. The rules changed recently and I will qualify for state pension under the new 'flat rate' rules with a projected 150%-ish of what I'd be entitled to at state pension age if I emigrate before qualifying.

 

 

If only the basic state pension were affected... FWIW, my main source of income will be my occupational pensions. Unfortunately, these were earned in the armed forces and other government service. As these are considered 'state pensions', they are subject to the freeze.

 

Can you provide a link for this information as this is not my understanding at all and I struggle to comprehend how such a rule can be applied. Clearly if this were the case then I would be affected in due course having emigrated last year. There would however have to be a definition of a date of emigration so anybody could return for a period to the UK to restart the clock so to speak.

 

You are totally incorrect about government service occupational schemes. These are index-linked under a completely separate mechanism from the state pension and are not affected by the country you retire to. I fear that you have been mis-informed on a number of fronts Geoff.

[winter1]

GeoffL

Is your 150%based on the fact you will have fewer qualifying years at the time you emigrate? I have not seen or heard any other legislation that states or implies this.

[Gbye grey sky]

GeoffL

Is your 150%based on the fact you will have fewer qualifying years at the time you emigrate? I have not seen or heard any other legislation that states or implies this.

 

I believe that Geoff is alluding to the more simplified 'new state pension' which came into effect last month. In simple terms this increased the maximum pension from £119.30pw to £155.65pw though it is not as straightforward as that as there are winners and losers on the new system. However AFAIK there is no alteration to entitlement to the new state pension if you emigrate before April 2016 however if I am mistaken about this I hope that @GeoffL can enlighten me.

[datstheone]

That's no longer true. The rules changed recently and I will qualify for state pension under the new 'flat rate' rules with a projected 150%-ish of what I'd be entitled to at state pension age if I emigrate before qualifying.

 

 

If only the basic state pension were affected... FWIW, my main source of income will be my occupational pensions. Unfortunately, these were earned in the armed forces and other government service. As these are considered 'state pensions', they are subject to the freeze.

 

Were you contracted out for any period that you were paying NI? If so then you will not get the full new flat rate.

 

The changes mean that the concept of contracting out has been done away with, so everyone pays full NI and will then get full single rate state pension rather than the old system where an additional top up was paid if not contacted out. However, this will take 35 years or so to work through the system! In the meantime pensions will be between the old state pension level and the new flat rate level. No one will be worse off than under the old system but only those who have never been contracted out or not for 35 years will get the full new flat rate pension. This clarification has only just been really publicised as people turning 65 after April found it out for themselves.

 

I only came to Australia last year after spending my full working life in UK and paying NI for more than 35 years, mostly contracted out. I turn 65 in June and have just sorted out getting a state pension from then. I have confirmation that this has been agreed and will be paid at around £124 p.w.

 

All the information I supplied related to my working history, nothing about when I emigrated. Only thing about emigration was on the notice of award stating that pension would be frozen at its starting rate while I am living in Australia.

[Gbye grey sky]

Were you contracted out for any period that you were paying NI? If so then you will not get the full new flat rate.

 

The changes mean that the concept of contracting out has been done away with, so everyone pays full NI and will then get full single rate state pension rather than the old system where an additional top up was paid if not contacted out. However, this will take 35 years or so to work through the system! In the meantime pensions will be between the old state pension level and the new flat rate level. No one will be worse off than under the old system but only those who have never been contracted out or not for 35 years will get the full new flat rate pension. This clarification has only just been really publicised as people turning 65 after April found it out for themselves.

 

I only came to Australia last year after spending my full working life in UK and paying NI for more than 35 years, mostly contracted out. I turn 65 in June and have just sorted out getting a state pension from then. I have confirmation that this has been agreed and will be paid at around £124 p.w.

 

All the information I supplied related to my working history, nothing about when I emigrated. Only thing about emigration was on the notice of award stating that pension would be frozen at its starting rate while I am living in Australia.

 

Thanks for clarifying this which is as I strongly suspected. Like you I was contracted out for 31 out of the 38 years that I paid NIC before emigrating last year but I will not be eligible for the pension for another 11 years (when I am 66 years, 7 months old). I am a little curious where they will draw the line on determining the non-contracted out years but figure in my situation it will make little difference anyway.

[GeoffL]

GeoffL

Is your 150% based on the fact you will have fewer qualifying years at the time you emigrate? I have not seen or heard any other legislation that states or implies this.

 

It's based on a pension forecast I received under the old pension rules a few months ago vs the reported amount on the UK DWP website for the new pension. These are £105 and £155.65 per week respectively. The new rules came into force on 6th April this year.

[datstheone]

It's based on a pension forecast I received under the old pension rules a few months ago vs the reported amount on the UK DWP website for the new pension. These are £105 and £155.65 per week respectively. The new rules came into force on 6th April this year.

 

As I said in my earlier reply the £155.65 is the full pension but only if you were not contracted out for the full 35 years qualifying period. If you were contracted out, and hence paid less NI at that time, the £155.65 is reduced accordingly, the assumption being that this is made up from the private pension you were paying in in order to be contracted out. Under the old scheme there was some form of additional pension for those who didn't contract out.

 

The new rules do away with concept of contracting out and additional pension so that now everyone pays the same and will get the same pension when they retire, or at least in the case of those just starting their working life who will clock up their 35 years of NI under the new rules. It will take this time for everyone to transition to the new scheme, in the meantime any contracted out period will result in a reduced pension.

 

While not knowing your exact position I strongly suspect that the pension you will receive will be nearer the £105 a week that you were given in your forecast than the £155 which has, somewhat misleadingly, been quoted as the pension from April this year. Again as I said in my earlier response I will be getting around £124 a week when I hit 65 in June after 38 years of full-time work paying contracted out rates of NI.

 

I suggest you get an updated forecast, though if you got it recently I guess that new rules would have been used to calculate it, even if any increase from last budget was not included.