State Pensions: Canada Free Trade Agreement

Wednesday 18th October 2023 Lords Chamber

Question

15:17

Asked by

[Lord Thomas of Gresford]

To ask His Majesty’s Government whether they intend to take steps to index United Kingdom state pensions to inflation for those entitled to them living in Canada, as requested by the government of that country in order to facilitate the proposed new free trade agreement.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, state pensions are not in the scope of the negotiations on a free trade agreement with Canada. The UK state pension is payable worldwide to those who meet the qualifying conditions, without regard to nationality. The amount is based on an individual’s national insurance record. UK state pensions are uprated overseas only where there is a legal requirement to do so. The Government have no plans to change this policy.

[Lord Thomas of Gresford (LD)]

My Lords, the Canadian Government say that, over the past 30 years, they have made repeated efforts to persuade the UK Government to do what they do for their own citizens: to index the UK pensions of UK retirees who are resident in Canada. On what principle do the Government distinguish between our pensioners in Canada, Australia, New Zealand and certain Caribbean Commonwealth countries and those whose UK pensions are not frozen—in the USA, for example, and, as reinforced in the recent Brexit trade agreement, in the 27 countries in the EU?

[Viscount Younger of Leckie (Con)]

The rate of contribution paid has never earned entitlement to indexation of pensions payable abroad. This reflects the fact that the UK scheme is designed primarily for those living in the UK. In drawing up expenditure plans for pensioner benefits, the Government believe that their responsibility is primarily towards pensioners living in this country. The UK’s current social security arrangements with Canada provide for individuals coming to the UK to use periods of residence in Canada for the purposes of entitlement to the UK state pension as well as certain other benefits.

[Baroness Seccombe (Con)]

My Lords, will my noble friend the Minister tell the House that we do fulfil our legal obligations to our overseas pensioners?

[Viscount Younger of Leckie (Con)]

Yes, I can certainly give some reassurance on that to my noble friend. She may know that the policy has been challenged in the courts, and the Government’s long-standing position has been upheld by the High Court, the Court of Appeal and the Appellate Committee of the House of Lords in 2005, as well as the European Court of Human Rights in 2008, following a further challenge.

[Lord Vaux of Harrowden (CB)]

My Lords, this goes way beyond Canada. Does the Minister agree that people who have worked and paid national insurance all their lives have earned their state pension? Can he therefore answer the earlier question, which he did not really answer: why, if you choose in retirement to go and live somewhere else, should you not receive what you have earned in full and on the same basis as anybody else?

[Viscount Younger of Leckie (Con)]

This issue goes back to what has happened in the past. The distribution of reciprocal agreements with countries is based on historic ties with those countries and the levels of labour and people mobility flows at the time that the agreements were concluded. We therefore very much have to look back at that, but I reiterate that we have no plans to include this in current or future free trade agreements. I also say to the noble Lord that, as he will know, if we look at the overseas territories, for instance, due to past, historic arrangements, Bermuda, Gibraltar and the sovereign base areas of Cyprus are included, but the rest are not.

[Lord Sahota (Lab)]

My Lords, I know quite a few members of the Asian community who have worked all their lives in the UK, paid their national insurance and taxes here but, after retirement, have moved to Canada because the Canadian immigration system is far more flexible when it comes to joining blood relations and families together. As a former leader of a council, I know how high the cost can be for a taxpayer for adult social care—sometimes as much as 50% of the revenue budget of a council. Therefore, when some of these UK pensioners move to Canada, UK taxpayers save millions of pounds in not having to look after them in their old age; that burden falls on Canadian taxpayers. After all, they have paid their taxes and their national insurance, why can their pensions not be inflation-proof?

[Viscount Younger of Leckie (Con)]

I am certainly very aware—this perhaps adds to the Answer I gave to the noble Lord, Lord Thomas—that the Department for Work and Pensions has received requests for a reciprocal social security agreement from Canada in recent years, including 2020, 2021 and, indeed, this very year. The choice of moving to another country—let us say, Canada—is very much a personal choice and it is not for the Government to encourage or discourage pensioners in moving overseas. I am sure they do so for reasons other than necessarily to do with pensions; it could be to do with family or returning to a country of birth. But, I say again, the Government have no plans to change the policy.

[Lord Palmer of Childs Hill (LD)]

My Lords, I hear what the Minister says, but the APPG on frozen pensions said in its report in 2020 that 80% of people retiring to Commonwealth countries—Canada, New Zealand and Australia, together with various Caribbean countries—were unaware that their UK pensions would be frozen. Can the Minister tell us what steps the Government have taken since then to publicise their likely predicament? I inform this House that the Government’s website contains no more than a passing reference to this and, like all passing references, it is in brackets. Can we at least remove the brackets and put it in bold type?

[Viscount Younger of Leckie (Con)]

My Lords, whether there are brackets or not, obviously I will need to go back and check myself what the website says. As I say, people move abroad for many reasons and, before they do so, I am certain that they look at all the pros and cons. It is also their responsibility to take advice and make an informed decision before they move. However, I hope it gives some reassurance that there is information—I hope it is not limited—on GOV.UK as to what the effect of going abroad will be on entitlement to UK state pensions. That is, as I say, just one factor that people will be bearing in mind when making that decision, difficult or otherwise, to move from the UK.

[Baroness Sherlock (Lab)]

My Lords, to come back to Canada for a moment, this was quite an issue in the Canadian media—I am sure the Minister has read the cuttings—but is he aware that last year the Canadian media reported on a woman who got a letter from the DWP telling her that her pension was being stopped and there was no right of appeal? The reason was that she had failed to reply to a letter demanding she return a certificate proving she was still alive. It then turned out that this had happened to thousands of people, none of whom had got the letter. The Canadian media reported that the DWP blamed the Canadian postal system, but this must be a challenge: if you never get a letter, you do not know you are meant to reply to it. You cannot send the certificate back, then you get a letter telling you your pension is over and you cannot appeal, and the DWP will communicate with you only by post. Has this been resolved and how can future pensioners be sure they do not get caught the same way?

[Viscount Younger of Leckie (Con)]

I cannot deny that the noble Baroness makes a very good point. I will certainly go back and look at the specific case she has raised. I think she is saying that it extends to others, and I will certainly look at that. As far as I am concerned, the Government should be—and I will check on this—making every communication available for individuals who are seeking to move abroad, particularly to Canada, to have as much of the correct information as possible that they need in order to make all the decisions to make that move.

[Lord Cormack (Con)]

My Lords, is my noble friend aware that a number of Members of your Lordships’ House have received letters signed by some 25 Canadian Senators? Did he receive such a letter? If he did, will he be kind enough to put a copy of his reply in the Library? If he did not, I will let him have my letter and perhaps he can do it with that.

[Viscount Younger of Leckie (Con)]

I can reassure my noble friend that I have received my own letter: actually, it happened to be today, because we have been away. I am already on it and I will certainly be replying to it. I shall be passing it to my officials and making sure that there is a response, and I will certainly make sure that my noble friend is copied in.

[Viscount Waverley (CB)]

My Lords, can the Minister help me understand why pension arrangements have anything to do with free trade agreements?

[Viscount Younger of Leckie (Con)]

If I have not said it before, I assure the noble Viscount that actually the two are separate: social security arrangements linking to pensions are separate from free trade agreements. I think I alluded to that in one of my answers, but let me make it completely clear.

[Lord Russell of Liverpool (CB)]

Last Thursday, I was in Strasbourg at the Council of Europe as part of the UK delegation. A group of Canadian parliamentarians very kindly invited a group of the UK members to lunch, and noble Lords may guess what the subject of the lunch was. I was sitting opposite a Senator who launched into a diatribe about the pensioner situation in Canada, and on my left was a female MP from an agricultural constituency who was bemoaning the fact that Canada imports a certain amount of British beef but is unable to export any beef to us at all. So, whatever the Minister and his department may think, there is indeed a very strong connection in the minds of the Canadian Government between the two.

[Viscount Younger of Leckie (Con)]

Yes, and I understand how they might wish to make that connection, but I reiterate again that we see no connection. In fact, the agreements that have been put in place in the past have been social security agreements. I also say gently to the noble Lord that the agreement between the EU and Canada is not dissimilar to the current agreement between the UK and Canada.