State Pensions: UK Expatriates

Margaret Ferrier Excerpts

Thursday 20th April 2017 Commons Chamber

[Margaret Ferrier (Rutherglen and Hamilton West) (SNP)]

It is nice to see you in the Chair, Madam Deputy Speaker. I am glad to have the opportunity to respond to the debate on behalf of the Scottish National party. I thank the hon. Member for North Thanet (Sir Roger Gale), who chairs the all-party parliamentary group on frozen British pensions, for securing the debate and congratulate him on an excellent speech; he is a strong advocate for pensioners and I am sure that they are lucky to have him. He stated that this is a matter of moral responsibility and that today gives us a chance finally to address it. He highlighted the plight of many ex-pat pensioners and concluded that the Government cannot afford not to pay.

The hon. Member for Leeds North West (Greg Mulholland) made an excellent contribution, noting that successive Governments of all colours have failed these pensioners and making the important point that those people do not have an MP of their own, and that when they come to us with their cases we cannot take them on.

The hon. Member for Worthing West (Sir Peter Bottomley) talked about a personal situation and the disparity between countries. He made the important point that the number of people living abroad and registered to vote will only increase, so perhaps we will then take more notice of them. He said that these proposals are fair, logical and right. I also thank all Members who contributed through interventions.

Today’s debate is yet another example of this Government’s atrocious handling of state pensions, which is a typical representation of the disdain and contempt with which the UK Government hold our older citizens, whether they are resident here or overseas. The Tories have ducked their responsibility to pensioners too many times, sticking their heads in the sand and ignoring the backlash, whether from the steadfast WASPI women—the Women Against State Pension Inequality Campaign—or the International Consortium of British Pensioners. It is time the UK Government faced up to reality: pensions are not a privilege; they are a contract, and the UK Government continue to break that contract.

It is clear from today’s debate that the SNP is standing up not just for Scotland’s pensioners, but for British pensioners around the world. Our track record in this Parliament speaks for itself: while the UK Government recklessly abandoned their obligations to the WASPI women, it was the SNP that rolled up its sleeves and did the work that the Government should have been doing, and it was the SNP that commissioned independent research proving that the Tories’ figures are completely wrong, and that the UK Government can afford to right the wrong they have done to the WASPI women. We therefore call for a great injustice to end for British pensioners living overseas.

Around 7.5% of British pensioners live abroad. As my hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford) explained, entitlement to receive the state pension relates only to the national insurance contributions made during a recipient’s working life, not to their place of residence. Despite that, the UK takes a wildly inconsistent approach to uprating state pensions. More than half a million pensioners—almost half of those living overseas—are excluded from uprating. My hon. Friend also made the point that their pensions are effectively frozen at the level at which they first received them abroad. Worse still, the vast majority of those with frozen pensions live in the Commonwealth—around a quarter of a million of those affected live in Australia, and almost 150,000 live in Canada.

Those people are not immune from the effects of inflation, yet they are forced to cope with their rising costs of living on a static income. As we can imagine, that has a major impact on their lives. A pensioner who made the required national insurance contributions in order to be eligible for a full state pension, but who has moved abroad and had their pension frozen, stands to lose out on a substantial amount of money. A 75-year-old who retired in 2006 will have lost out on over £10,000. An 81-year-old who retired in 2000 will have lost out on an eye-watering amount—over £22,000. Those are substantial figures, which no doubt put great strain on the lives of those affected, yet this Government seem not to care.

That is hardly surprising, because this Government do not overly concern themselves with pensioner poverty at home, so how could we expect them to give a monkeys about impoverished British ex-pats? I recall that during the 2014 Scottish independence campaign pensioners were fed no end of nonsense about the risk to their pensions in an effort to panic them into voting no. The reality is that this great, fantastic Union, with its mighty broad shoulders, offers one of the most shamelessly pitiful and paltry pensions in the world. Only two countries in the OECD pay poorer pensions than the UK. The OECD 2015 report “Pensions at a Glance” showed that countries such as Turkey, Russia and Greece pay significantly bigger retirement incomes than we do. We should be utterly ashamed of our state pension system and, by extension, of how we treat our pensioners.

It is not just this Government who should shoulder the blame, because our pensioners have been seriously let down by successive Westminster Governments. When the OECD report was released, Tom McPhail, head of retirement policy at Hargreaves Lansdown, said:

“This analysis makes embarrassing reading for the politicians who have been responsible for the UK’s pensions over the past 25 years”.

I must admit that I cannot disagree with that assertion.

I am sure that current pensioners and those due to retire in the near future will have little faith in what is to come. I am sure also that they will be poring over party manifestos in the coming weeks, looking for a commitment to continue the pensions triple lock. The Cridland report will have worried many people, specifically because of its recommendation to drop the lock. Indeed, this Government have guaranteed it only until 2020. The upcoming general election provides an opportunity to guarantee it beyond that. However, that would be of little comfort to overseas pensioners suffering with frozen pensions.

Likewise, that guarantee will be of little comfort to British pensioners living in the EU, who simply do not know whether the same fate will befall them, with no guarantee that their pensions will be uprated following Brexit. When the UK leaves the EU and the single market, the Government will no longer have a legal requirement to uprate state pensions. Without a new and reciprocal social security agreement agreed as part of the Brexit negotiations, almost half a million EU-resident British state pensioners could face a frozen pension. Those pensioners deserve to know where they stand.

The pensioners living overseas with frozen pensions deserve justice. Contributing to the state pension is compulsory. The Government are effectively discriminating against retirees, based solely upon where they live, despite their having made the same national insurance contributions. That discrimination is leading to pensioner poverty and a loss of independence, and it is even forcing pensioners to return to the UK without their family.

The International Consortium of British Pensioners informs me that most of the pensioners affected did not know that their pension would be frozen if they retired in some countries abroad. Just as we have seen with the WASPI women, sharing of information with retirees is lacking. As the hon. Member for Leeds North West mentioned, the policy is also leading to discrimination against ethnic minorities. The frozen pension policy has a particularly significant impact on the life choices of those in British black, Asian and minority ethnic communities, who retain close cultural links to many Commonwealth countries where pensions are frozen.

The Government might claim that the cost of unfreezing pensioners is unaffordable. Ministers have sometimes cited numbers into billions of pounds. The motion proposes the withdrawal of the social security benefit uprating regulations, which would include previously frozen pensions in this year’s 2.5% increase, the cost of which is just £30 million. Assuming that that inclusion continued in subsequent years, the cost would rise by around £30 million extra each year. When this Government are renewing Trident, at a cost of hundreds of billions of pounds, it is indefensible to say that this uprating is unaffordable.

It is time the UK Government started getting it right for pensioners. It is time that priorities were put right. Let us stop pouring endless amounts of public cash into weapons of mass destruction and start treating people with the dignity and respect they deserve in their later years.

--- Later in debate ---

[Sir Peter Bottomley (Worthing West) (Con)]

Further to that point of order, Madam Deputy Speaker. The Minister has been very clear and helpful. If the practice is for such helplines, which are for our constituents rather than for us, to be closed down before Parliament has stopped sitting—before we stop being Members of Parliament—may I suggest, through you, that those who are listening should change the practice and make sure that that happens when Parliament is dissolved, and not simply because an election has been called?

[Margaret Ferrier (Rutherglen and Hamilton West) (SNP)]

Further to that point of order, Madam Deputy Speaker. The Minister has made it clear that he will communicate with the shadow Minister, but can we ensure that there is communication with all Members of the House if this closure happens? We hope that it will not, because it will impact all our constituents in a very big way.

[Madam Deputy Speaker]

If the Minister would like to respond to that, it would be very helpful.