Over 500,000 elderly British expats, about half of them Australia-based, are reeling from the shock news that the European Court of Human Rights has rejected their claim that the UK’s long-standing frozen pensions policy is discriminatory and in breach of the Human Rights Act.
The bitterly resented policy was introduced in the mid-1940s by the socialist Clement Attlee government. It penalised Britons who retired to most Commonwealth countries. Even though they had contributed to the UK’s mandatory National Insurance pension scheme, their pensions were not uprated in line with inflation Apparently this was because it was assumed that their living expenses in sun-drenched Commonwealth nations like Australia — and particularly their winter heating expenses — would not be as great as those confronted by compatriots perishing in post war Glasgow, Liverpool and other then very bleak areas of the UK.
Yet over the decades, and in spite of radically changing times in the UK, its frozen pensions policy has remained in force, or rather partly in force because it does not adversely affect its National Insurance Fund contributors who retire to most non-Commonwealth nations, including European Union countries, the United States, Israel and Turkey. They receive the same annual pension increases as contributors who remain resident in the UK.
Meantime, in line with the policy, many Commonwealth-based retirees have not had their British pensions indexed for years and in some cases, decades. And those penalised by the policy include not only Britons, but Australians, Canadians, South Africans, New Zealanders and others who spent many years of their lives working in the UK and contributing to its mandatory pension scheme.
In fact one of the 13 cases referred to the ECtHR by a consortium of Commonwealth-based pensioner lobby groups concerned an Australian, Penelope Hill, who worked in the UK and paid into its mandatory pension scheme from 1962 until 1982. In order to provide as best she could for her retirement years she continued to contribute to the UK fund following her return to Australia. Yet, in compliance with the frozen pensions policy, her British pension has not been uprated in line with cost-of-living rises since she began drawing it in 2000.
The majority of the cases mentioned at the European court, however, detailed the plight of elderly Britons who had contributed to the UK’s mandatory scheme for between 40 and 50 years and who had also served in Britain’s armed forces during WWII, As a result of the policy several of these expats have not had their UK pensions increased since, for example, 1990 when the basic weekly rate was about £46.90. It is now about £90.
Canada, Australia are among the handful of Commonwealth countries which offer financial assistance to British expats impoverished by the UK policy. The current cost to Australia is about $A110 million a year.
Had the European Court ruled in favour of the pensioners, the Australian taxpayer would have been relieved of this outlay. In addition, Australian would have benefit by an increase in the amount of revenue flowing into Australia each year by way of pension payments from the UK Department of Work and Pensions. That figure is currently about £400 million, but expat pensioner chiefs estimate it would have been increased by at least a third if the European court had ordered the defrosting of all the frozen pensions.
The minister in charge of the issue, Jenny Macklin, is expected to shortly comment on the European court’s six-to-one decision that the policy is not discriminatory. The matter was referred to the court by a consortium of expat pensioner organisations following previous unsuccessful action in the High Court in London, the Appeal Court and the House of Lords.
The action has been financed by contributions from expat pensioners. Their leaders are expected to make a statement shortly as to whether they will pursue the claim for equal pension rights in the EctHR’s court of appeal, the Grand Chamber, The pensioners have consistently claimed that they are discriminated simply because of their retirement domicile — because of they have chosen to retire to, say, Australia rather than Amsterdam, Atlanta or Alaska.
Many point out that they left the UK only because they wanted to spend their retirement years with adult emigrant children in Australia, Canada and New Zealand.