Pensions: Expatriates

Roger Gale Excerpts

Tuesday 20th May 2025 Westminster Hall

[Sir Roger Gale (Herne Bay and Sandwich) (Con)]

I congratulate my hon. Friend the Member for Farnham and Bordon (Gregory Stafford) on raising an issue that, quite simply, is a matter of national shame. I had the privilege of chairing the all-party parliamentary group on frozen British pensions for more years than I care to remember, and in that task I had the staunch support of Sir Peter Bottomley, Lord German and many others. We all regarded this as a non-partisan issue. It was quite simply a cross-party matter that had to be resolved.

In spite of the effort that we put into it over many years, successive Governments of all political persuasions have sheltered behind the myth that we uprate pensions only in countries with which we have a reciprocal arrangement. Historically, we have had a reciprocal arrangement with the United States but not with Canada. On one side of the Niagara Falls, people get their pension uprated; a couple of hundred yards across the river, people do not.

That is arrant nonsense, and it is unjust for all the reasons we have heard this morning. These are British citizens who paid their dues over their whole working lives before emigrating. They are as entitled to the full state pension as any other British citizen. John Markham, of blessed memory, led the campaign in Canada for many years. The irony is that, every time he came back for two weeks to make the case to whoever was in power, he would claim his two weeks’ uprated pension, because the moment he set foot on British soil, he was allowed to have it. Where is the sense in that?

The point has been made that pensioners in the majority of Commonwealth countries do not receive uprated pensions, but pensioners in the European Union do, because we reached a reciprocal arrangement when we left the European Union. I am delighted that expat UK citizens living throughout the European Union are getting their pension uprated. That is absolutely right—they have paid their way—but I fail to see why people living in what we proudly used to call the British Commonwealth do not get their money.

What about those living in Australia? What about people like Norma Maloney in South Africa or the greatly revered Anne Puckridge, who I have been privileged to meet on many occasions, in Canada? Why do they not get their money? The answer is quite simple: it comes down to the Treasury solicitors, who have historically been absolutely terrified that, if we give an inch, somebody will try to bring a class action to get a backdated pension, and of course those sums would be astronomical.

When Sir Oliver Letwin was in the Cabinet Office, he made the eminently workable proposal that we should uprate whatever pension the recipient was getting at the time of the uprating. Anne Puckridge would get the triple-locked increase on her fairly pitiful pension, not on anything retrospective. That is not what the expats ought to be receiving or what they are entitled to, morally, but it would work, because over time—by attrition, as people fall off the perch—we would reach the parity we ought to have today.

I was as critical of the previous Government as I am of the current one. They are sheltering behind a Treasury lawyers’ position that is wholly untenable and, I believe, patently dishonest. These elderly people—and I speak as an elderly person—have paid their way. They are entitled to their money. They should have it, and the Government must do something about it now.

--- Later in debate ---

[Sarah Olney (Richmond Park) (LD)]

It is a pleasure to serve under your chairmanship, Mr Dowd. I thank the hon. Member for Farnham and Bordon (Gregory Stafford) for securing this debate.

Nearly 13 million UK citizens receive the state pension, and around 1.2 million of them live outside the UK. Most of those people are entitled to state pension increases because they live in the European economic area or in the 15 other countries with which the UK has signed an agreement. In return for uprating the state pension, those countries have promised to continue supporting their own citizens living in the UK.

It is right that UK citizens who have diligently paid into the UK national insurance system over many years are entitled to receive their UK state pension, whether or not they decide to move abroad. However, the issue at the forefront of today’s debate is whether pensioners who reside overseas receive annual increases to their pension.

As other hon. Members have set out, this depends on the specific country in which a person lives. My Liberal Democrat colleagues and I know it is unfair that some UK pensioners abroad receive state pension increases while others do not, simply because of the country in which they live, not because of the contributions they have made to the UK national insurance system. Addressing that is a matter of fairness and equality, especially for those who have paid into the UK system for their entire working lives.

There has been a long-standing campaign to rectify this discriminatory system. However, the last Conservative Government refused to take any positive steps to increase the number of reciprocal agreements, which would have had the effect of uprating pensions. In fact, it is disappointing—although unsurprising—that under the last Conservative Government, agreements lapsed and the best interests of both British nationals residing overseas and non-British pensioners residing in the UK were neither prioritised nor championed.

We saw catastrophic economic mismanagement under the last Administration, with spiralling inflation rates and a soaring cost of living. That hugely exacerbated the gap in the value of pensions paid to recipients in countries with reciprocal agreements and those paid to recipients in countries without, with a completely unacceptable impact on hundreds of thousands of pensioners.

The majority of pensioners who live overseas receive pension increases because they live in countries with reciprocal agreements. However, many fall through the gaps and are left struggling. Currently, half a million UK pensioners living overseas do not receive the annual state pension increases that those in the UK and in certain other countries are entitled to. This issue affects my constituents and the constituents of many hon. Members. Their pensions are effectively frozen at the rate when they first started claiming—sometimes decades ago. This frequently leaves long-term pensioners abroad significantly worse off over time.

The UK Government have stated that they uprate pensions only in those countries where there is a mutual agreement. Many of those agreements have not been updated or renegotiated for decades, and no new ones have been signed since 1981. Countries such as Australia and Canada have repeatedly requested new agreements, but the UK has declined. Frozen pensions are the norm in countries such as Australia, Canada, New Zealand, South Africa and parts of the Caribbean and Asia, despite significant British expatriate populations. It is critical that the Government tackle this injustice and take steps to ensure that all pensioners receive the support to which they are entitled. However, it is also critical that this comes alongside a fair deal for the UK taxpayer.

Rather than unilaterally increasing the state pension for UK citizens living abroad, I urge the Government to prioritise entering new arrangements with other countries that would manage costs and provide oversight. That would be more affordable and provide a better framework for monitoring payments. Colombia, Mongolia, Thailand, Uruguay, Brazil, Australia and Canada have all approached the Government in the past decade to ask for a reciprocal agreement, and each time the Government have refused.

We have seen the Government enter new bilateral and multilateral trade negotiations over the last few weeks. As they work to build new trade partnerships with countries across the globe, there is a real opportunity to speak out for thousands of British pensioners who currently face unfair financial hardship. I urge the Minister to ensure that existing agreements are not allowed to lapse. The Liberal Democrats also call for the inclusion of reciprocal pension agreements in future trade deals. More broadly, the Liberal Democrats believe that the Government should conduct an independent review of frozen pension policy, an issue that has been raised with me time and again by constituents.

The previous Conservative Government abandoned pensioners and totally failed to give them proper support. This Labour Government have also treated pensioners poorly by cruelly ripping away the winter fuel payment. The Liberal Democrats are proud to be the ones who introduced the triple lock, lifting thousands of vulnerable pensioners out of poverty.

[Sir Roger Gale]

It saddens me enormously that the hon. Lady is trying to make a partisan case, simply because—as I recall, and I think I do recall correctly—a member of her party was the Pensions Minister in the coalition, and one of many pensions Ministers who stood by the present policy of refusing to allow these pensions to be paid. The blame lies across the board, not with any one political party.

[Sarah Olney]

I am grateful to the right hon. Member for his intervention; his memory obviously goes back further than mine on this issue. However, we are dealing with the current situation, and the Minister here today is the person who currently has the power to do something about it. I am merely reflecting on the set of circumstances that led us here.

What I will say is that, in the Liberal Democrat manifesto for the last election, we committed to the triple lock. We remain committed to the triple lock, and I will take further opportunities to ask the current Minister, with the power currently to do something about this issue, to redouble his commitment to it. I will also make the point that, as I am sure the right hon. Member will agree, that this Government are not doing everything they can for pensioners.

The Liberal Democrats are looking to the future, and we want to build a country that is the best place in the world in which to save for and enjoy retirement. We want to give everyone the chance to enjoy a decent retirement, by developing measures to end the gender pension gap in private pensions and to ensure that working-age carers can save properly for retirement. We must also improve the state pension system by investing in helplines to ensure quicker responses to queries and resolution of underpayments, as well as ending the scandal of lost top-up payments by overhauling the processing system and providing proper receipts.

The Liberal Democrats are proud to be the party that champions the rights and protections of pensioners. We will continue to hold the Government to account to ensure that a fair outcome is reached for all pensioners—both those who reside in the UK and those who live abroad.

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[Torsten Bell]

I recognise the point that the hon. Member is making. I offer a few reflections on that. Some countries already do provide uprating for their pensioners based in the UK, so some of that is already in place, although it does vary across countries. It is, obviously, always for countries to set in place their own social security system. That is why the Australian system, for example, provides means-testing of the state pension, or elements of means-testing of their state pension. I suspect most people—with the possible exception of the Leader of the Opposition on occasion—do not support means-testing of the state pension.

I come on to the other point made by the hon. Member in the debate, which was to call for new reciprocal arrangements to put in place more widespread uprating. As I have explained, that would require significant tax rises. There is no way around that. The issue she raised would not negate that effect.

It is worth putting ourselves in other’s shoes. Why did the Liberal Democrat Pensions Minister for five years not change the policy on this issue? It was because he recognised the costs involved, and that it would involve tax rises. It is worth us reflecting on why the situation is not as some people would like.

[Sir Roger Gale]

Does the Minister consider that it is morally acceptable for Canada to uprate the pensions of its citizens in this country and to also bear the cost of this country not uprating its pensions for UK expats in Canada when Canada has formally offered to enter into a reciprocal arrangement? Why is that offer not being accepted?

[Torsten Bell]

Canada is a close ally of this country. We talk about that a lot in the current climate, for a whole host of reasons, and that is not going to change.

The right hon. Member is correct that Canada has made requests for a formal reciprocal arrangement, but the UK Government’s position—and that, again, of all parties—is that we are not in the business of new reciprocal arrangements with any countries. The only recent agreements have been the roll-over agreements with the EU and the EEA by the previous Conservative Government, but that was to maintain the existing social security arrangements, not to put in place any new reciprocal arrangements over that time.

I fully recognise the case that many hon. and right hon. Members have made today. I see the ongoing campaigning that those Members have put in place and that of many pensioners who are affected, but as I have said, the policy on uprating pensions is a long-standing one. More importantly, changing it involves real costs and trade-offs.

I gently note—very gently, so that I get out of this room safely—that many of the people calling for pensions to be uprated are also calling for reverses to the winter fuel payment policy and compensation for WASPI women, but are not calling for less investment in the NHS or higher taxes. In the current financial climate, there are real choices, and there have been no suggestions in this debate about how any of these policies would be funded.

I fully recognise the issues raised by Members today. I hope that I have explained why that recognition sits alongside the long-standing policy in this area, and I look forward to hearing the closing remarks from the hon. Member for Farnham and Bordon.