Each year, an estimated 500,000 pensioners miss out on seeing their state pension rise. This is by virtue of where they have chosen to live, as state pension increases are not guaranteed.
The state pension only rises in the following places:
- The UK
- European Economic Area (EEA)
- Countries with a social security agreement with the UK (but not Canada or New Zealand).
Expats in other areas will see their state pension frozen at the level it was when they decided to leave an eligible nation.
In an exclusive interview with Express.co.uk, Sheila Telford, director of the International Consortium of British Pensioners (ICBP), argued many expats are facing a financial plight due to their pension being frozen.
Ms Telford argued against a common talking point, which suggests affected expats should return to the UK to see their state pension boosted.
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“But it would all be at enormous cost to the taxpayer.”
Ian Andexser, also a director of the ICBP, argued the current pension system is ineffective when it comes to dealing with the affairs of frozen pensioners.
He highlighted a “weird anomaly” which the group themselves were facing first-hand on their visit to the UK.
Mr Andexser continued: “We are here for 10 days, and can claim our rightful pension.
“We have to contact the DWP, tell them we are here, and the ‘unfrozen’ part is uprated for a period of 10 days or two weeks.
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“There’s an entire department of civil servants dealing with people like us. What a waste of money!”
The notion of a frozen pension is a long-standing policy, which the Government states it has no plans to change.
However, many of those impacted by a frozen pension take issue with this notion.
Former chairman of the ICBP, John Duffy, added: “If it’s a valid argument that it’s a historic policy and it can’t be changed – why would anything change, ever?
“In some countries, you have to have a level of income to live there.
“You might have gone there with that level of income, but because a pension hasn’t gone up with inflation, you drop below the minimum level.
“That puts you at risk. We know of one person who had to sell her house in Mexico as a result, and leave the country.”
The Department for Work and Pensions explains it understands people move abroad for different reasons, and this can impact their finances.
A spokesperson added: “There is information on GOV.UK about what the effect of going abroad will be on entitlement to the UK state pension.
“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.”