British expats warm to the idea of unfreezing pensions

[reader]

From Pattaya Mail

By Barry Kenyon

The 520,000 British pensioners who live abroad, including 30,000 or so in Thailand, are being encouraged to use their newly-endowed power to vote in UK general elections.  The idea is to vote only for a political party which guarantees to upgrade their state pensions annually, just like their contemporaries back home.

The right to the expat vote in British elections was agreed earlier this year by Boris Johnson’s government and replaced an old rule that the franchise lapsed after 15 or more years abroad.  However, there is an elaborate registration procedure in constituencies which may deter all but the most fervent expats.  Many constituencies have changed their names and boundaries over the years.

The freezing of the UK old age pension – at the level when they left Britain – applies to expats living in more than half of all countries, including Thailand and most of the Commonwealth.  However, Brits living in the European Union, the United States and even the Philippines do receive annual increases in the normal way.  The reasons are archaic.  A special Brexit deal was reached with the EU, whilst some other countries are exempt from freezing because of “reciprocity”.  Best of luck sorting that one out.

John Duffy, chairman of the International Consortium of British Pensioners, said the discriminatory practice was indefensible as the frozen pensioners had paid their taxes in working life just like everyone else.  He believed that a huge effort from elderly expats could make a real difference at general election time.  The next one is scheduled for 2024 but could come earlier as the law for fixed-term parliaments has been abolished.

https://www.pattayamail.com/news/british-expats-in-thailand-warm-to-the-idea-of-unfreezing-their-old-age-pensions-362330

[Guest]

I would have thought the way forward is to lobby MPs long in advance of the next election, so that they might consider putting policy change in party manifestos.

Have any expats registered to vote ?     If so, which constituency are you registered in ?     The one you lived in last, presumably ?    Given any choice in the matter, a marginal constituency would be preferable, but I can't imagine them offering a choice.

[vinapu]

3 hours ago, z909 said:

.....which constituency are you registered in ?     The one you lived in last, presumably ?    Given any choice in the matter, a marginal constituency would be preferable, but I can't imagine them offering a choice.

that's the problem with all 'first past the  post systems".

Theoretically , long absent former residents by voting there may tip voting result  in constituency against the voting pattern of majority of actual residents. 

 

[Guest]

55 minutes ago, vinapu said:

that's the problem with all 'first past the  post systems".

Theoretically , long absent former residents by voting there may tip voting result  in constituency against the voting pattern of majority of actual residents.

In a lot of countries, PR systems allow small parties to gain a foothold and in certain cases, we see extreme parties holding the balance of power, despite having only attracted a small proportion of the vote.  Therefore I am happy to stick with the first past the post system. 

As for overseas residents, I see no reason why someone should retain the right to vote after emigrating at a young age, spending most of their life working abroad and not paying UK taxes.  Such people would neither have to pay the taxes levied by the government nor suffer from the policies on a daily basis.   I'm all for the freedom to emigrate and therefore escape UK taxes, but don't expect to vote up other people's taxes after emigrating.

However there probably is a case for allowing people who have worked and paid taxes for (say) 25 years to keep the vote, since they have contributed to the UK economy and built up pension rights.  

However, since the expats ARE getting the vote back, I'd like to think they will get their act together and apply some organized pressure on the government to inflation index all overseas pensions.   The pension is only paid to those who  have made National Insurance contributions, so it is only fair that they get the pensions they paid for.

[PeterRS]

12 hours ago, z909 said:

As for overseas residents, I see no reason why someone should retain the right to vote after emigrating at a young age, spending most of their life working abroad and not paying UK taxes.  Such people would neither have to pay the taxes levied by the government nor suffer from the policies on a daily basis.   I'm all for the freedom to emigrate and therefore escape UK taxes, but don't expect to vote up other people's taxes after emigrating.

That seems a singularly inappropriate argument. I am a UK citizen born and brought up in the UK. I moved overseas at a relatively young age. I was not a rich fat cat like so many who just decided to base themselves in Swiss or Caribbean tax havens. I had a good University degree and considerable experience in my chosen field. I went because I was offered a job that was a slightly better job than I had in the UK and a better job that I could have then obtained in the UK. I did not return to the UK for the simple reason that I could get jobs with more responsibility in Asia than I could in the UK. I work in a highly specialised field and there simply are very few jobs in the UK in that field. 

When I moved overseas I did not decide unilaterally not to pay UK taxes. I was informed by the government of the day that that was the regulation. I did not unilaterally decide I did not wish to vote. That was a decree brought in by the Margaret Thatcher government after i had left and no government department ever saw fit to inform me. Why should the right to vote in the country of one's birth and education depend on being resident in the country and paying taxes in that country? That makes no sense to me whatsoever. If one is a citizen of the country, the right to vote should be automatic. It also annoys me greatly that citizens of other countries can park themselves in the UK and then end up with the right to vote.

Besides, in addition to taxes there is the issue of National Insurance which is not dependent on taxes. This is the amount deducted from wages and salaries which gives the worker two rights: first to access to the National Health Service and second to the state pension. If you work overseas, you do not have to pay this contribution, but then your rights are justifiably either reduced or withdrawn. To maintain my full rights I elected - note, elected! - to pay the NI premiums in full for the entire period I worked overseas. Then what happened. Tony Blair's government decided that access to National Health treatment would be withdrawn after something like 6 years away from the country, even from those paying their contributions. This was made more stringent in a 2015 parliamentary Act. As with the Thatcher government, no government department bothered to inform me. 

As for the freezing of pensions, I do not know when that happened. But it is a nonsense when the contributions have been fully paid up and so confirmed by the relevant government department. Additionally an overseas pensioner creates almost no drain on the services available to the elderly within the UK. We should therefore receive a higher pension!

A government has a right to change rules. But it has absolutely no right, in my view, to change rules and at the same time backdate the changes. And to do so continuously without informing those whom the changes affect is an utter disgrace. Change should only be forward looking. I want to vote in the UK. It should be my right. I want and deserve access to the NHS should I require it. I want my full pension and not the reduced one I have reluctantly been given.

The one problem for those who have been overseas for some years is the constituency system. I have no idea if my old constituency still exists. So, why not have an overseas constituency?

[PeterRS]

16 hours ago, z909 said:

I would have thought the way forward is to lobby MPs long in advance of the next election, so that they might consider putting policy change in party manifestos.

It will never work. I have written several letters to MPs, notably the Secretary of State for Work and Pensions. Pre-Brexit I also wrote to several UK members of the EU parliament. The best reply I received was a statement of government policy followed by "we are constantly reviewing the situation" nonsense. The current government with its large majority states this on its website - "The Government has no plans to change the policy on up-rating UK State Pensions overseas; the policy is longstanding and has been supported by successive Governments for over 70 years." Bye bye increases!

But for any government to argue that conditions in 1951 were similar to those in 2021 is more than disgraceful. In 1951 Britain was still in a sorry state economically as it recovered from the war. Many items were rationed and hardly any ordinary folk moved overseas because they could not afford to do so - even if the thought might have come into their minds. The only people who moved overseas were the rich. They did so primarily to escape the crippling 91% rate of tax on their incomes. The government's argument is totally false.

[Guest]

3 hours ago, PeterRS said:

It will never work. I have written several letters to MPs, notably the Secretary of State for Work and Pensions. Pre-Brexit I also wrote to several UK members of the EU parliament. The best reply I received was a statement of government policy followed by "we are constantly reviewing the situation" nonsense. The current government with its large majority states this on its website - "The Government has no plans to change the policy on up-rating UK State Pensions overseas; the policy is longstanding and has been supported by successive Governments for over 70 years."

This probably depends on a large enough number of expats being registered to vote AND lobbying their MPs.   So I suspect you are correct & it will not happen. 

So I guess that leaves the option of making one's own private pension provisions.   Or for people who failed to do that, live in a country where the pension is indexed.  

Not everything in life is fair, but overall, being born the the UK in the second half of the 20th century is way better than some of the alternatives (North Korea, Myanmar etc)

[PeterRS]

51 minutes ago, z909 said:

So I guess that leaves the option of making one's own private pension provisions.   Or for people who failed to do that, live in a country where the pension is indexed.  

I agree with the former. But what would you do if you had not been told by any government department at any time that your pension would be frozen from the date of first drawing it down? If you only learn that a few years before taking it, It's a bit late to think of private pension arrangements. Of course, nobody should ever have based their retirement purely on the basic state pension even if it had not been frozen because it will never cover anything like a retiree's full financial requirements. But in the case of the two expats I wrote about in another thread who I assume have now been deported, had they been entitled to the full basic pension, the difference over 20 years would be somewhere like 2 times 125,000 baht annually. That's quite a tidy sum.

[vinapu]

6 hours ago, PeterRS said:

Additionally an overseas pensioner creates almost no drain on the services available to the elderly within the UK. We should therefore receive a higher pension!

 

overseas pensioners don't pay VAT on everyday purchases like resident elderly do. So yes , there's no drain on services but also no contribution to economy from expats.

still I agree that having pension indexed or not , depending of where one lives is unfair idiocy.  

[Guest]

3 hours ago, PeterRS said:

I agree with the former. But what would you do if you had not been told by any government department at any time that your pension would be frozen from the date of first drawing it down? If you only learn that a few years before taking it, It's a bit late to think of private pension arrangements. Of course, nobody should ever have based their retirement purely on the basic state pension even if it had not been frozen because it will never cover anything like a retiree's full financial requirements. But in the case of the two expats I wrote about in another thread who I assume have now been deported, had they been entitled to the full basic pension, the difference over 20 years would be somewhere like 2 times 125,000 baht annually. That's quite a tidy sum.

Like you, I don't agree with the indexation policy, but it is a "known".     We either get it changed or adapt to it & only adapting to it is entirely within our control.

1    If intending to retire abroad, people should take some responsibility for researching the pros and cons.    So they ought to be aware of the implications.    The two expats covered in the other thread appear to have made no attempt at all to live within their means.   Had they taken a sensible approach from the start of retirement, they would probably have the funds for another 5~10 years which might be sufficient.        Incidentally, if they were hopeless with money in retirement, they may well have been equally hopeless before hand.   

There are some people around who spend their life flying business class, driving BMWs and staying in fine hotels.   Which is absolutely fine if they have done the maths and figured out the money will not run out, with something of a safety margin.

2    Had they done a simple budgeting spreadsheet & found the numbers don't add up without indexation, then one option is to live in a country where the pension would be indexed. 

Regarding Vinapu's VAT argument, if anyone gets the basic state pension and spends 100% of it on goods where VAT is charged at 20%, they would pay £1431 in VAT.   However, they might spend a 20~30% on food rated at 0% for VAT and another 15% on gas & electric with 5% VAT (yes, tax on carbon emissions is lower than normal !!!!).   So let's say they pay £900 in VAT. 

That should be compared with the healthcare costs on the elderly, which would not be funded by the UK taxpayer if the expat stays away from the UK.    From the graph below, I think the taxpayer gets a good deal if people emigrate permanently (which is another question).   

[PeterRS]

31 minutes ago, z909 said:

1    If intending to retire abroad, people should take some responsibility for researching the pros and cons.    So they ought to be aware of the implications. 

That is a fair point. But it assumes a person knows he will retire abroad when he leaves the UK. I left the UK at a youngish age and fully expected to return. After all, I was only on a 3-year contract. I did not know when I departed that I would be offered two contract extensions. I did not know that other opportunities would open up for me in Asia when I was expecting to return to the UK. When I left I investigated what I could. I knew I would have to continue paying the full NI premiums to maintain a right to a full pension and arranged to do so. Similarly I knew that would enable me to have access to the National Health Service whenever I wished. i did not change the rules - governments did and then failed to notify me. I do not believe it is incumbent on any UK citizen working overseas to check on the rules every year. The government was well aware of my address from my NI file. It could easily have sent a circular to all citizens working overseas advising them of changes. The UK government did nothing.

[10tazione]

• Why not formally repatriate to the UK for the minimum time necessary to get the pension indexed, and than return to Thailand?
• I suppose moving abroad is not what countries want their citizens to do, so I have some (very limited) sympathy to make it a bit uncomfortable...
• One argument for not letting expats vote would be that they don't have to experience the consequences of their vote ... but then they should gain the right to vote in the country where they live. EU moved a little bit in that direction, at least for EU citizens living within EU, at least at the local election level.

[PeterRS]

8 hours ago, 10tazione said:

• Why not formally repatriate to the UK for the minimum time necessary to get the pension indexed, and than return to Thailand?

After living 20 years in Thailand and with no residence in the UK, having to spend six months in the UK each year to gain £15 or so extra per week doesn't make much sense to me, unfortunately.

[caeron]

Governments have an annoying habit of making trusted policy out of stupid ideas and bad ideas.

They can screw you, so they do... because they can't be bothered to stop.

[Guest]

I'm not sure when this UK government policy was introduced, but it's over 20 years and some of the correspondence earlier implied it might have been very long term.

All we have to do is familiarize ourselves with the rules and prepare as well as we can, including perhaps saving the money, rather than putting that new Jaguar on the drive.

Having prepared properly, then recognize there are many things that could mess your pension up in future:

Inflation, exchange rates, tax changes, wars, regime change, changes to laws, e.g. requiring pensioners to invest in "safe" assets like government debt (purpose to fund government spending)

So reduce the risks for what is within our control and don't worry about what is out of our control.