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        Updated: April 17, 2024

        Frozen UK state pensions abroad

        Are you a British expat with a frozen pension? Find out what your options are and how to cash in your funds in this guide

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        Every day we receive a number of enquiries concerning “frozen pensions”.

        Frozen pensions are often confused with dormant pensions – and it’s easy to see why since they’re essentially the same thing – whereby people have changed jobs and are looking to locate and consolidate their retirement funds.

        While this can be a fairly simple and often financially lucrative process for many, this isn’t always the case for UK expats living overseas.

        But what’s the reason for this, and why is it important to speak to an expert if you’re considering retiring abroad? In this article we’ll be covering:

        How do UK frozen overseas pensions differ from domestic dormant pensions?

        “Frozen state pensions” or “frozen pensions” refers to the practice of the British government “freezing” state pensions for those who have retired in particular countries overseas.

        “Dormant pensions” refer to often “forgotten” workplace pensions from previous jobs which are no longer contributed to, and you are yet to claim.

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        How does the frozen state pension policy impact British expats?

        Currently, around 550,000 British Pensioners (4% of all recipients of the State Pension, and half the pensioners living overseas), are adversely affected by the frozen pension policy.

        Rather than receiving the annual uprating, these peoples’ pensions are frozen at the level they first received for the remainder of their life abroad. In practice, this means that their state pension decreases in real terms value year-on-year.

        So for example, a pensioner aged 90 who has lived in a country affected by the frozen policy since retirement would be receiving a pension of just £43.60 a week, compared to the £113.10 they’d be getting in the UK.

        Shockingly, the International Consortium of British Pensioners (ICBP) recently revealed that over 75% of UK savers aren’t actually aware that their state pension could be frozen at the rate it’s at if they choose to retire abroad.

        Why is the UK state pension frozen in some countries?

        The decision to freeze pensions for those retiring abroad has been ratified by successive governments, and further enforced with the introduction of the new State Pension in April 2016.

        In March 2018, Pensions Minister Guy Opperman explained that there are two main reasons for freezing pensions for UK expats:

        • “Up-ratings are based on levels of earnings growth and price inflation in the UK which have no direct relevance where the pensioner is resident overseas.”
        • “The cost of up-rating state pensions overseas in countries where we do not currently up-rate would increase immediately by over £0.5 billion per year if all pensions in payment were increased to current UK levels.”

        Essentially, the reason for not awarding pension increases in some countries is down to cost, and the desire to focus “limited resources” on pensioners residing in the UK.

        In April 2019, it was confirmed that there are no plans to change the policy and this remains the case at the time of writing.

        What countries are affected by UK frozen pensions?

        The majority of queries we receive on frozen pensions relate to popular UK retirement destinations Australia and Canada.

        Frozen UK pensions in Canada

        The frozen state pension policy affects approximately 144,000 UK pensioners living in Canada, according to the Canadian Alliance of British Pensioners – a group advocating for indexed pensions.

        The Canadian government says it has proposed that the UK and Canada sign a comprehensive social security agreement that would allow for indexation, but the UK has declined.

        Frozen UK pensions in Australia

        The fight against the government’s stance on frozen pensions is very much ongoing in Australia, led by the British Pensions in Australia organisation.

        The main aim of the organisation is to force the UK government to recognise British citizens’ right to index-linked pension parity with their UK counterparts.

        The organisation’s chairman reports that they are currently working with the Canadian Alliance of British Pensioners, and acting through the International Consortium of British Pensioners, in the fight for full parity for all British pensioners living abroad.

        What other countries are affected by the UK expat frozen pension policy?

        95% of the pensioners affected by the frozen pension movement live in either Australia, Canada, or other former Commonwealth countries New Zealand or South Africa.

        But these aren’t the only countries affected by the policy; the list is extensive, also spanning to India, Pakistan, Bangladesh, all African countries, and most Caribbean islands.

        The countries where UK pensions are not frozen and are increased as standard each year include the USA, Barbados, Bermuda, Israel, Jamaica, Mauritius, the Philippines, and all EU countries.

        It remains to be seen whether Brexit will bring about changes to the policy relating to other European countries.

        Why speak to a frozen pensions advisor?

        Getting your head around frozen state pensions can be overwhelming to say the least, and as the rules are ever-changing, we want you to be aware of your entitlements.

        We work with a number of expert pension advisors who can offer you bespoke advice tailored directly to your circumstances.
        So if you’re a British pensioner living overseas and want to know your rights, get in touch for a free, no-obligation chat, or give us a call on 0808 189 0463

        Ask A Quick Question

        We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in pensions Ask us a question and we'll get the best expert to help.

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        Tony Stevens

        Tony Stevens

        Finance Expert

        About the author

        Tony has worked in a vastly diverse array of areas in the pensions industry for over 20 years. Tony regularly writes for trade press, usually on topical and pensions pieces as well as acting as a judge at prestigious national events.

        Tony is also a highly qualified Independent Financial Adviser in his own right. His mantra has always been “Hope for the best, but plan for the worst”, and believes that the biggest impact that an adviser can have on a client’s life journey is to take them on a journey from generally having little or no real idea of what their retirement will look like, to giving them the understanding of what their retirement looks like now, then helping them navigate a path to what they want their retirement to be.

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