Retirees who have opted to spend their later years abroad, will not “see a penny of the state pension increase” as they live in a country without a reciprocal social security agreement with the UK.
For 2023/24, the full new state pension is £203.85 weekly (£10,600.20 yearly), whilst those on the old state pension are paid £156.20 weekly (£8,122.40 yearly).
There are around 12.6million people claiming a state pension, however, the average income is £166.13 (women £156.35 vs £177.65 for men).
Although those in the UK on average are getting less than the full amount, pensioners abroad are getting a fraction of this income.
It is only countries abroad with a ‘reciprocal agreement’ in place that will honour the state pension increases seen by UK retirees, so their state pension incomes will rise in line with their UK counterparts.
The state pension is only guaranteed to be uprated in the following places:
- The UK
- European Economic Area (EEA)
- Gibraltar
- Switzerland
- Countries with a social security agreement with the UK (but not Canada or New Zealand).
However, if an individual lives outside of these countries where no such agreement is in place, the UK pension is frozen at the point the person leaves the UK and they will not get yearly increases.
This includes:
- Australia
- Canada
- New Zealand
- Antigua and Barbuda
- Trinidad and Tobago
- Grenada
- St Lucia
If the triple lock increases by the latest average earnings data, payments will rise by 8.5 percent meaning pensioners in the UK could get around £221.20 a week from April 2024.
However, those abroad relying on the state pension for their retirement income won’t feel the full effect of this increase due to the way the system works.
Tom Evans, managing director of Retirement at Canada Life said: “Another bumper boost to the state pension will offer a glimmer of hope for many retirees as we face into another winter with continuing high energy costs and stubborn high inflation.
“But it’s worth remembering many people relying on the state pension for their retirement income won’t feel the full effect of this increase due to the way the system works, with the average weekly payment presently around £166 a week.
“For those retirees who have opted to spend their later years abroad, many will have seen their state pension frozen at the point they left the UK and won’t be seeing a penny of this increase.”
For expats living in a country without a reciprocal social security agreement, the state pension amount is frozen at the level of the first payment.
For example, an expat in Thailand reaching state pension age in the 2023/24 financial year with 30 qualifying years of national insurance contributions has a first payment of £174.60 weekly.
The payment remains at this level until the pensioner returns to live in the UK or dies.
According to the Department of Work and Pensions, the government pays the state pension to around 1.2 million expats, with an average weekly payment of just £77.06.
The pension is increased in line with the cost of living hikes in the UK for 700,000 expats – but the remaining 500,000 are excluded from up-rating.
Robert Lloyd Crutchlow proposes that expats should have their State Pension increased to the current payment rates and receive the annual uprating every April.
He explained: “We believe the need for reciprocal social security agreements has long passed as other countries already pay their pensioners in the UK annual increases. We believe the freezing of UK citizens’ pensions is discriminatory, unjust and immoral.”
A Government spokesperson said: “Our priority is ensuring every pensioner receives all the financial support to which they are entitled.
“We understand that people move abroad for many reasons and we provide clear information about how this can impact on their finances.
“The government’s policy on the uprating of the UK state pension for recipients living overseas is a longstanding one of more than 70 years and we continue to uprate state pensions overseas where there is a legal requirement to do so.”
