HALF a million British expats have had their state pension frozen while abroad due to restrictions on those not living in the UK.
An article produced in the Daily Express newspaper reports that current pension rules mean the majority of retirees in the UK see their sum rise each year under the triple-lock guarantee. State pension usually goes up by the rate of inflation or average earnings growth, whichever is highest. Those who live abroad are still able to claim their UK state pension but the Department for Work and Pensions has rules in place that restrict the annual increases for British expats in certain countries. Retirees living in USA, the European Economic Area, the Philippines, Barbados, Bermuda and Israel do get the same increases as those in the UK.
But it reports that around 510,000 British pensioners living in Canada, Australia and New Zealand do not benefit from the yearly rise. This is because deals have not been struck between the UK government and these countries.
The Department for Work and Pensions has repeatedly claimed there are no plans to allow increases for British pensioners in the effected countries.
But the department said the pension amount will go up for those who return to the UK.
A spokesman said: “You can claim State Pension abroad if you’ve paid enough UK National Insurance contributions to qualify.
“Your pension will go up to the current rate if you return to live in the UK
There are two different types of state pensions available, depending on when you were born and your gender.
The maximum basic state pension amount recently increased at the start of the new financial year to £129.20 per week, up from £125.95 per week.
The full new state pension is now £168.60 per week, a rise from £164.35 per week.
Meanwhile, a bombshell report published this month has revealed how more than half a million people could be paying unnecessary tax on their state pension.
The research, by insurer Royal London, said that people who work beyond retirement age are the ones at risk.
Savers who are still working past the pension age have the option to defer their state pension until they stop work. But large numbers of people in this age group are failing to do so, paying tax unnecessarily on income they may not need.
In addition, they are missing out on an extra 5.8 per year uplift on their pension for each year that they defer.
An average male worker could gain around £3,000 by deferring for a year and a female worker, with a longer life expectancy, could be around £4,000 better off over her retirement typically, Royal London said.
This information is provided strictly for general consideration only. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned about the content hereof and any such action or inaction. Professional advice is necessary for every case.
Julian Kaye Dip PFS