Pensions: British Citizens Overseas

Baroness Altmann Excerpts

Wednesday 24th February 2016 Lords Chamber

[Baroness Benjamin]

To ask Her Majesty’s Government what assessment they have made of the impact of the frozen pensions policy on the choices of people who would like to move abroad or stay overseas during their retirement years.

[The Minister of State, Department for Work and Pensions (Baroness Altmann) (Con)]

My Lords, the Government have a clear position which has remained consistent for around 70 years: UK state pensions are payable worldwide and uprated abroad only where we have a legal requirement to do so. The Government have made no assessment of the impact of this policy on pensioners’ choices of residence.

[Baroness Benjamin (LD)]

My Lords, I thank the Minister for that Answer. Last November, the right honourable Oliver Letwin met with an international consortium of British pensioners and the chair of the All-Party Group on Frozen British Pensions and he committed that the Government would examine the case for partial uprating by commissioning cross-departmental research into the likely costs and savings—which was great news. Will the Minister please give an update on that work? Will we see the outcome before the Government bring in partial uprating regulations that freeze overseas pensions yet again for another year, continuing this injustice?

[Baroness Altmann]

My Lords, the Department for Work and Pensions has not made any estimates of the costs of this uprating. External sources have suggested that the costs of partial uprating are estimated at around £200 million a year by 2020.

[Baroness Hooper (Con)]

My Lords, can my noble friend tell us what will happen to the some 400,000 pensioners living in European Union countries should the UK vote to leave the European Union? Will their pensions be frozen, either partially or totally?

[Baroness Altmann]

The issue of what will happen if this country leaves the European Union has not yet been decided, but if there are reciprocal agreements and legal obligations to uprate, pensions will be uprated.

[Lord Morris of Handsworth (Lab)]

My Lords, will the Minister assure the House that those members of the Gurkha regiment who are entitled to a pension are in receipt of their entitlement?

--- Later in debate ---

[Baroness Altmann]

My Lords, I have no information at this point on specific measures for the Gurkhas, but I will write to the noble Lord on that matter.

[Lord Swinfen (Con)]

My Lords, what is the estimated saving to Her Majesty’s Government of pensioners living abroad not using the National Health Service and other government services?

[Baroness Altmann]

The speculated potential savings, were people to move back to this country, have not been costed, but the costs of full uprating for the state pension in countries where it is currently not uprated would be more than £500 million a year.

[Baroness Smith of Basildon (Lab)]

My Lords, because of accelerated equalisation, many women who had,

“made careful financial plans to ensure their small savings could last them until state pension age … now find that they will be left for up to two years with nothing to live on - despite doing what the Government urges everyone to do and plan ahead for their future”.

Those are not my words. Does the Minister still agree with the comments that I took off her personal website today, and can she tell the House what she and other Ministers are doing to alleviate that situation?

[Baroness Altmann]

My Lords, the maximum increase that any woman will face as a result of the 2011 Act changes was reduced from two years to 18 months.

[Lord Howell of Guildford (Con)]

My Lords, I see that the International Consortium of British Pensioners estimates the partial uprating—uprating from the present rates received—as £31.5 million. The Minister just gave a figure of £200 million. Can she explain the difference between the two?

[Baroness Altmann]

The figures that I have been given from outside estimates are that the cost would be around £200 million a year by 2020. It is possible that the noble Lord is citing something for one year only.

[Lord Harris of Haringey (Lab)]

My Lords, I do not think that the Minister has fully answered two questions that have been put to her. The first was by the noble Baroness, Lady Benjamin, who specifically asked about a commitment made on behalf of the Government by Oliver Letwin. Will she tell us the status of that commitment now? The second question was from my noble friend the Leader of the Opposition, who specifically asked about statements on the Minister’s own personal website. Does she resile from the statements on her own website?

[Baroness Altmann]

I have no information about any work that is going on in other departments. I can only report that in the Department for Work and Pensions no estimates are being made about the costs of uprating frozen pensions.

[Baroness Gardner of Parkes (Con)]

Is the Minister able to tell us how many countries pay from their own funds? For example, I understand that Australia ups the pension of anyone from the UK living in Australia, and the Australian people pay whatever would have been the extra. I think the same thing applies in the United States. Can she tell us how many countries adopt that policy and also say whether there has been any estimate of what it would cost if all those pensioners living overseas came back and used everything here instead of abroad?

[Baroness Altmann]

My noble friend referred to Australia, which is an interesting example of one of the potential issues with uprating. The Australian pension system is means tested. Therefore, the estimate is that over 25% of any payment made to uprate overseas state pensions in Australia would merely go to the Australian Treasury.

[Lord Kinnock (Lab)]

“Three times for a Welshman”, my Lords. May I ask for a third time: does the Minister resile from the statements that she made on her own website?

[Baroness Altmann]

My Lords, the statement on my website referred to the position before the 2011 Act when women were facing up to two extra years. That was brought down during the 2011 Act to 18 months.