Pensions: Expatriates

Debate between Jim Shannon and Torsten Bell

Tuesday 20th May 2025 Westminster Hall

[Torsten Bell]

There must be a legal basis for making payments. However, the hon. Member is right to say that under the specific policy I am setting out, payments are made only when there is a legal requirement to do so. As the hon. Member for Farnham and Bordon set out right at the beginning, that is a long-standing policy that has lasted for 70 years. For many years, the priority for successive Governments of all parties has been to prioritise those living in the UK when making difficult spending decisions on pensioner benefits. That was true of the coalition Government, when a Lib Dem Pensions Minister chose for five years not to make any progress on this issue. He did that under a Conservative Government and a Conservative Prime Minister all the way through.

The hon. Member for Brecon, Radnor and Cwm Tawe (David Chadwick)—my constituency neighbour—mentioned Lloyd George, who introduced a state pension with no uprating whatever. The first uprating of the contributory state pension in 1946, under the Attlee Government—again, I am making a point about the cross-party basis of some of these decisions—was not paid to pensioners living abroad. So since the beginning, policy on pension uprating has been consistent.

As we have discussed, people move abroad for many reasons—to be with their family, as the hon. Member for Strangford (Jim Shannon) set out, enjoy a particular climate or return to their country of birth. It is for individuals, not the Government, to make those decisions, but when they make them, they will of course consider the impact on their finances, alongside a wide range of other factors. As the hon. Member for South West Devon (Rebecca Smith) set out, our duty is to ensure that information regarding the effect of living abroad on the state pension entitlement is available. These days, that is on gov.uk, and includes information on where the uprating does and does not occur.

Pensioners who have retired to other countries will obviously take into account the UK state pension position, but they will also look at the wider provision for pensioners in those countries. Many countries will have a means-tested provision that is similar to the UK pension credit. It is true that the real-terms value of some people’s state pension will fall over time, but in most cases, particularly in the countries that have been mentioned today, that will be compensated for by higher means-tested payments when they are living abroad.

It is also important that further advice can be obtained from the International Pension Centre or the Pension Service. The hon. Member for South West Devon asked whether there is more we can do, and I want to be clear that I am always open to new ideas about what more we can do to communicate what happens to the state pension if people choose to retire abroad. More generally, I am happy to meet with any hon. Members who have suggestions in that area.

[Jim Shannon]

I gave the example—others will have similar examples—of a constituent who had moved to Canada. She phoned the DWP to ascertain her pension obligations and responsibilities, and was assured that her pension would follow her, but quite clearly it did not. The Minister outlined a system whereby it should be able to follow her, but that lady went a stage further—she actually phoned the Department, which told her that it would not matter and she would still receive her pension—and quite clearly it did not.

[Torsten Bell]

I thank the hon. Member for sharing that story. I have not heard of specific cases like that, and he might like to write to me about it. The position with respect to Canada is clear: somebody can take their state pension with them, but the uprating will not be paid once they are living in Canada. That is what the gov.uk website spells out. However, I am open to talking about individual cases and to hearing suggestions about what more we can do to communicate clearly, because this is an important issue.

Of the 1.1 million state pension recipients overseas, 652,000 live in countries where pensions are uprated. However, I do not want to hide from what that means, because that is why we are here today; as my hon. Friend the Member for Poole (Neil Duncan-Jordan) said, it means there are more than 400,000 pensioners living in countries where uprating is not paid. By volume, those are in the countries that have been mentioned most today: Australia, Canada and New Zealand. Many hon. Members have spoken eloquently of the impact of living in a country where that uprating is not paid, and I have heard about it myself in correspondence from those affected, as I have said.

That does not mean that we can wish away the real trade-offs that are involved. There would be significant additional costs to be borne by current taxpayers if uprating were extended to everybody living overseas, as the hon. Member for Aberdeen North calls for. The cost of increasing all state pensions in payment to current UK levels would be approximately £0.9 billion a year, as has been mentioned. If there were any above-inflation uprating, it would then increase gradually over time.

[Jim Shannon]

Will the Minister give way?

[Torsten Bell]

Let me get through the discussion of the costs, and then I will take any interventions on that issue.

I recognise that many campaigners are asking for indexation in future, not for retrospective indexation, although there are obviously disagreements among campaigners about the exact ask to prioritise. However, arguing that we can simply put in place indexation going forward does not escape the need to recognise the real trade-offs involved. The long-term impact would be the same, as the right hon. Member for Herne Bay and Sandwich (Sir Roger Gale) explained. In the end, moving to forward-looking indexation would take us to the same increase in spending levels as would immediately lifting people up to the current level of the basic and new state pension. It is the same effect in the long-run, and we owe it to everyone to make financial decisions based on the long-run effects of the policies that we call for.

There are wider considerations about the net financial effects of these decisions. The hon. Member for Strangford and others raised the issue of health expenditure. To get to a wider understanding of the net effects, we have also to take into account where income is taxed and where it is spent. That does not get us away from the underlying point, which is that, focusing narrowly on the question of uprating, the costs are as I have set out.

Oral Answers to Questions

Debate between Jim Shannon and Torsten Bell

Tuesday 20th May 2025 Commons Chamber

[Torsten Bell]

I certainly can. Our reforms to the local government pension scheme will support local investment in every part of England and Wales. Our defence spending plans will be felt on the ground—total defence spending in the west midlands totals £1.6 billion a year. We are building reservoirs again, including one in the west midlands. We are also getting the country trading once again, including businesses in Tamworth, where PI-KEM, a specialist chemical supplier, recently won a major export order, with £100,000 in UK Export Finance support. Britain, and Tamworth, are open for business.

[Jim Shannon (Strangford) (DUP)]

I want to ask about 18-year-olds, who are just starting off, being encouraged to take out a pension. Whenever I was 18, my mother took me down to see John Thompson, the pensions man in Ballywalter, and he said, “You’re going to take a pension.” I asked, “What for, Mum?” She said, “You’re taking a pension.” So I took the pension. Does the Minister agree that what everybody really needs is somebody like my mother to encourage them to take a pension?

[Torsten Bell]

I did not know where that was going, but I know that I speak for everybody in the House when I say that the whole country needs someone like the hon. Gentleman’s mother.

Mansion House Accord

Debate between Jim Shannon and Torsten Bell

Tuesday 13th May 2025 Commons Chamber

[Torsten Bell]

I thank my hon. Friend for her question. We should focus on the accord today, but the LGPS is a very important part of our pensions landscape; there are £400 billion-worth of assets under management, rising to £1 trillion-worth over the next two decades. It is right that we build on the LGPS track record of local investment to make sure that we get the absolute best value for that investment both for taxpayers in local areas and for local communities. That is exactly what our reforms will do—we will be coming forward with the final details in the pension investment review final report in the coming weeks—to make sure that we have bigger, professional, well-governed and locally investing pension pools.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for his positive answers to the questions that have been posed from all parts of the Chamber today. While it is encouraging to see 17 workplace pension providers investing 10% in private assets, it is disappointing that Scottish Widows, for example, is refusing to sign up. What further can be done to ensure that investment will be focused not simply on London firms, as others have referred to, but throughout the United Kingdom, including the tremendous potential in Northern Ireland?

[Torsten Bell]

Some 90% of the industry, by active saver numbers, have signed up to the accord today, and the small number of large providers who have not signed up are supportive of the move towards greater private investment. There is a very broad consensus across the industry that this is the right way to go. Unrelated to that, but much more importantly, the hon. Gentleman is absolutely right that we need to see that investment right across the country, including in Northern Ireland and in his own constituency.

Women’s Changed State Pension Age: Compensation

Debate between Jim Shannon and Torsten Bell

Monday 17th March 2025 Westminster Hall

[Torsten Bell]

My predecessor, who I just mentioned, did meet the ombudsman prior to the decision being announced by the Government. Parliament has been very engaged in this issue, as demonstrated today and in January’s debate led by the right hon. Member for South Holland and The Deepings (Sir John Hayes). The Government have made their decision and it is right that hon. Members hold us accountable for it, as they have done powerfully today.

[Jim Shannon]

The judicial review is pending. It is like the sword of Damocles hanging over the head of the Government. Does the Minister fear the judicial review that will, perhaps, force the Government to give WASPI women the compensation and justice they deserve?

[Torsten Bell]

I thank the hon. Gentleman, but I suspect that was a statement rather than a question. He knows that the Government will not comment on a live litigation. In answer to questions asked by other Members, I will, of course, be happy to meet with the chairs of the APPG, subject to the constraints of that live legal case. As a Department, we must and will learn the lessons from this case.

Support for Pensioners

Debate between Jim Shannon and Torsten Bell

Wednesday 12th February 2025 Westminster Hall

[Torsten Bell]

The right hon. Member is absolutely right to raise the case of those who might need support to complete the form. That is why one of the elements of the campaign we have run this year is targeting not pensioners directly, but friends and family, to encourage them to help people to apply for pension credit themselves.

[Jim Shannon]

Will the hon. Gentleman give way?

--- Later in debate ---

[Torsten Bell]

We will be maintaining the triple lock throughout this Parliament, as promised in our manifesto. In April, the basic and new state pensions will increase by 4.1% and 12 million pensioners will see a concrete increase—whether Members believe it or not—of up to £470.

Several Members mentioned the need for long-term planning. That commitment to the triple lock means that spending on the state pension is forecast to rise by over £31 billion this Parliament. At the individual level, that translates into the new state pension being on track to rise by up to £1,900 a year, and the basic state pension —the pension that is relevant to those who hit the state pension age before 2016—by £1,500. But the last 15 years tell us that we need to do more for pensioners.

[Jim Shannon]

In my contribution I hinted that attendance allowance might be another method of giving benefit entitlements to qualifying pensioners. Not every pensioner would qualify, but many would. I suggest a concerted campaign by the Government to make every pensioner aware of all the benefits. As the right hon. Member for Aldridge-Brownhills (Wendy Morton) said, sometimes they are shy, sometimes they are independent, and sometimes they do not know they are entitled to things.

[Torsten Bell]

The hon. Member raises an important point. Attendance allowance would entitle a pensioner to extra income to pay for extra costs, including heating if required, but it would also lead to a higher threshold for qualification for pension credit. However, he is right that we need to see people applying for those benefits.

As I was saying, the last 15 years tell us that we need to do more for pensioners, and that returns on private pension savings matter too. We are undertaking a comprehensive pensions review to ensure that the pensions system is fit for the future, building on the success of auto-enrolment, which was introduced under the last Government and has seen over 11 million employees saving into a workplace pension. That is one of the big areas of progress in the pensions landscape in the last 25 years.

The Government are committed to further reforming our pensions landscape, so that it drives up both economic growth and returns to savers, via the upcoming pension schemes Bill. We need bigger and better pension funds investing in productive assets such as infrastructure. We need to help individuals consolidate small pension pots and have sight of them via the pensions dashboard, so that they can plan for security in retirement. The measures in the Bill could help the average earner who saves over their lifetime have over £11,000 more in their pension pot when they come to retire.

Agricultural Property Relief

Debate between Jim Shannon and Torsten Bell

Tuesday 28th January 2025 Westminster Hall

[Torsten Bell]

I will make some progress and then I will give way.

We see a similar picture for business property relief. It is in large part these reliefs that mean the largest estates pay materially lower rates of inheritance tax than more modest estates. That undermines faith in the fairness of our tax system more generally. Given the pressures we face, it cannot be right to leave this system unreformed, which is a point the hon. Member for Waveney Valley (Adrian Ramsay) made well.

That is the context and the rationale for the changes to how we will target agricultural property relief and business property relief from April 2026. Contrary to the claims that these reliefs are being scrapped, which I am afraid to say were repeated by the hon. Member for Strangford (Jim Shannon) just now, we will continue to provide significant tax relief, including for small farms and businesses. Individuals will still benefit from 100% relief for the first £1 million of combined business and agricultural assets. Importantly, the relief sits on top of all the other spousal exemption and nil-rate bands. Depending on people’s circumstances, up to £3 million can be passed on by a couple to their children or grandchildren free of inheritance tax.

[Jim Shannon]

I will try to be brief. On the rateable value, which the Minister mentioned earlier, my understanding after talking to the legal person of the Ulster Farmers’ Union is that the rateable value is based on whether the farm was handed over in the 1970s, in the 1980s, in the 1990s or even in the 2000s, but the rateable value does not show the real value of the land. Therefore, it is a flawed system. If it is a flawed system, the Minister needs to go back to the very beginning and look at it. I say that respectfully; I am not trying to catch anybody out. I am just saying that if something is not right, then get it right.

[Torsten Bell]

The point I was making was about the hon. Member’s point that the relief had been scrapped; I was just making the point that the reliefs have certainly not been scrapped and that they remain very generous indeed.

Beyond the thresholds I mentioned, the 50% relief will continue and there will be a reduced marginal inheritance tax rate of 20%, rather than the standard 40%. Furthermore, in response to the points raised by several Members today about the cash-flow challenges that some farms face, particularly after bad years like last year, I will point out that heirs can spread the payments over 10 years interest-free, which is a benefit that is not seen anywhere else in the inheritance tax system.