WHEN DAVID L GEORGE, BACK IN THE EARLY 1900'S, CONCEIVED THE IDEA OF AN INSURANCE TO PROVIDE AN INCOME FOR RETIREES AND THOSE UNABLE TO WORK LITTLE DID HE KNOW HOW MODERN DAY POLITICIANS WOULD DESTROY IT
BPiA’s submission to the UK Parliamentary Pension Working Party
BPiA’s submission to the UK Parliamentary Pension Working Party
will focus on the aspect of the UK pension bill, with which we are most interested, that is Clause 20. This Clause purports to retain the existing discredited system whereby the State pension is not uprated each year for some recipients of a UK pension who
are resident in some but not all countries overseas. They discover their UK pension, for which they have paid under exactly the same contribution rules as other retirees in the UK or some specified countries, is “frozen” because of the country
to which they have migrated and retired.
We gather the Parliamentary Working Party has decided to not consider this issue in its pre legislation scrutiny, but we protest this is a significant matter, for it affects over half a million recipients of
the UK pension and potentially thousands more who are either now approaching pension age or discouraged from leaving the UK to migrate to a country where the UK State pension is frozen. It is because of this that the issue requires a decision.
regard we wish to direct the Working Party [WP] to the conclusions of the 1996/7 Parliamentary SelectCommittee which considered the specific issue of frozen pensions. In their concluding paragraphs this select committee made
some telling comments.
Britain was alone among OECD nations in discriminating between pensioners in different overseas countries rejecting any suggestion of compromise.
“Surely no one would have deliberately designed a policy of paying pensions to people living abroad intending to end up in the position we are at today…
The report went on; - It would be clearly impracticable to negotiate individual bilateral agreements with each of the countries in the world where people draw British State pensions and in any case unnecessary; a
simple change of British law could enable upratings to be paid in any or all overseas countries provided the political will was there to do so.”
it must be for the House to decide and that is our concluding recommendation: That there should be a free vote at prime time to allow Members to express their opinion on the principle of whether the Government should pay upratings to some or all pensioners
living in countries where upratings are not paid at present.”
As Lord Carswell opined in the Lords hearing of the Carson v the UK Government case 2005 “there is no justification for paying some [expats] less
than others.”“The government mayhave been entitled under domestic law to take this course [of denying uprating to some expats abroad] if it so chose, but I consider
the Convention [of Human Rights] operates toprevent such discrimination” He “declared thatRegulation3
of the Social Security Benefits Uprating Regulations is unlawful and of no effect as being incompatible with Mrs Carson’s Convention rights.”
This dissenting opinion of Lord Carswell is supported by the words of Home
Secretary, Jack Straw speaking on 2 October 2000 at St Pauls Cathedral, when he spoke on the subject of “Human Rights and Personal Responsibility” with regard to the
UK’s new Human Rights Act which had recently been introduced in the UK Parliament. “A modern civil society is based on basic values of individual worth and equality of opportunity for
all …under the Human Rights Act everyone gets the same basic guarantees from our public services whoever we are and wherever we live.”“Courts do get strong powers
to give legislation ameaning that fitswith ECHR rights wherever possible. And there is also the power todeclare
primary legislation incompatible with Convention rights.”
At this stage we should consider Article 14 of the Human Rights Convention headed “Prohibition ofDiscrimination”
“The enjoyment of rights and freedoms set forth in this Convention shall secure without discrimination on any grounds such as sex, race, colour, religion, property, birth or other status.”
We at BPiA understand the concept of the Rule of Law and we are aware that frozen pensions arise because of the passing each year of “Regulation 3 of the Social Security Benefits uprating Regulations”
which regulates to ensure that those expats retired in certain countries are denied their pensions to be uprated annually. However as Lord Carswell shows and which Home Secretary Jack Straw’s speech supports, this Regulation 3 is unlawful
and the Court has powers to declare primary legislation incompatible with Convention rights.
So Regulation 3, which denies pensioners who have retired to some countries where there is no bilateral agreement, having their pensions uprated annually.
It is the regulation which Lord Carswell considers unlawful, for it is, in his opinion, incompatible with the Human Rights Conventions and which The Home Secretary implies is superior law. These rights are based on basic values of equality of opportunity for all.
Moreover the UK now has an Equality Act 2010
which is violated by the Government’s Regulation 3 by not treating fairly and equally all pensioners irrespective of where they are retired.
Then this Regulation 3 is part of the “Persons Abroad Regulations” of which
3 Lords Justice, Rix, Clarke of Stone-cum-Ebony and Carnwarth opined, its drafting is lamentable, it lacksclarity and it’s draconian. These opinions are include in the conclusion to the case “The Secretary
of State for Work and Pensions and Yates on May 13th 2009 in the Supreme Court of Judicature” The State lost this case.
The CHOGM Singapore Declaration 1971 at section 8 states, “We [all the
Commonwealth nations] will use all our efforts to foster human equality and dignity everywhere”. Why one asks then, is this call at a CHOGM to foster equality everywhere not applied by the British Government, to the payment of pensions even if only throughout the whole Commonwealth? Surely Britain is the supposed leading light in the Commonwealth? UK pension recipients
in some Commonwealth nations have their pensions uprated, why no equality for all. These nations include Mauritius, Cyprus, Malta, Jamaica, Barbados and Britain but not in the others. Not in Trinidad, nor St Kitts, St Vincent, Antigua, Guyana Grenada etc in
the Caribbean. This practice is therefore also in violation of this CHOGM declaration. How can the British Government hold its head high in partnership at CHOGM with the other Commonwealth nations when it violates this Commonwealth Declaration which was later
confirmed in Harare in 1991? Are some expats therefore “more equal than others?”
Now we come to the issue of fairness. Fairness is used by politicians throughout
the world it appears, almost without any thought given to what they are actually saying. They all seem to delight in telling us they are fair in all they do. For example:-
Britain promotes fairness,
as well as non-discrimination in many speeches given by its politicians.
Gordon Brown, Labour’s PM in 2008 littered his keynote speech at the Labour Party Annual Conference with several references to fairness.
He said, “We will be the rock of stability and fairness upon which people stand”. “And why do we strive for fairness?
We do it because it is in our [Labour’s] DNA.” “We fight hard for fairness, we don’t give in, we never will.” “Fairness istreating others as we would be treated ourselves.” “In a fairsociety
the fact that older people are living longer shouldbe a blessing for their families and not a burden.”“That’s fairness older people deserve and the fairness that every Labour party member will go out and fight for.”“The fair society,
fairness at home, fairness in the world. That’s thenew settlement for new times. The mission of our times, the
fair society, the cause that drives us!”
Furthermore, David Cameron in his early days as PM stated quite clearly, “Fairness is at the heart of everything we do”. May 12th 2010.
Notwithstanding hearing or reading all these platitudes of fairness being uttered and supposedly fairness is at the heart of British politics, how can the 550,000 expats whose pensions are frozen, ever believe what
Time and again we have been told by DWP the pension is not uprated in some countries because of the cost.
Moreover from the
UK Parliament’s Select Committee report 1996/7 Given the perennial constraints on public expenditure it is hard to identify a single compromise which would substantially meet the expatriate pensioners’ case at a reasonable cost”.
This was at a time when there was not an austerity programme in place.
The answer to this comment is dealt with in the last paragraph of this section. Do not think of pensions alone, identify the adverse consequences of this unfair pension
payment policy and consider the thousands of pensioners who are discouraged from leaving the UK, which, if reversed, would be to the overall UK budget’s considerable benefit!
We agree the annual cost of indexing all State pensions
is estimated at over £650 million in 2012/3, but we are not looking for any retrospective adjustments, only to have our pensions paid from now on as they would be if we lived in an uprated nation, like the US, Spain, Eire, Israel, Barbados, the Philippines,
Putting this annual amount into perspective, it represents about just 0.7% of the pension budget; shrapnel! The NI Account has a balance of £30+ billions. This is more than double the prudential balance of 1/6th of the annual
expenditure on State pensions, which the Government Actuary says is required. The Government Actuary’s 2013 report conclusion is;-
“On the basis of my estimates, the balance in the National Insurance
Fund at March 2014 is expected to be greater than 1/6th. of the amount of benefit payments in 2013 – 14. This exceeds the minimum level that has been recommended to ensure that a reasonable working balance is maintained. In my view it should
not therefore be necessary for any Treasury grant to be made to the National Insurance Fund in 2013 – 14”
Moreover there are adverse consequences which occur as a result of non-uprating the pension. These adverse
consequences can be explained by the following: Many thousands of people would be delighted to retire abroad, often to return to their homelands or to join their younger families overseas but they are discouraged from making this move because their UK State
pension is a significant part of their annual retirement income. This applies in particular to the lower paid people; - viz-
March 18th 2004 Pensions Bill debate in Committee; per Piara Khabra MP for Southall made his
comment ..." there is definitely an anomaly in the law because some people are deprived of the right to uprate their pensions while others are not".... "Many ethnic minority pensioners from India, Pakistan and other Commonwealth countries have
lived in this country for 40-50 years. They are bitter about the current law which deprives them of the opportunity to uprate their pensions while making it available to people in other countries."
but perhaps not to
“the rich” who it seems are the ones being targeted by some MP’s via this non uprating practice.
per Steve Webb March 18th 2004 Pensions Bill debate
in Committee; There are those who have argued that the issue is just making a noise for the rich few who can afford to live in sunny climes and that frankly they can look after themselves. Some of those people are well off –I cannot deny
that- but some are not. Some have ceased to be well off because they have been retired for a long time on frozen pensions .We are not talking of feathering the nest of the favoured few, but justice. It is said that they knew
what they were doing. Probably some did and some did not, but it is known that pensions are frozen if one goes to certain countries. I have met overseas pensioners who say that was far from clear at the time.”
Should the pension policy change and all pensions be uprated, irrespective of the country to which the recipient retires, it is forecast, from a recent survey conducted by AGEUK, that gradually thousands more pensioners, who under the current restrictive
rules have stayed in the UK, would most likely leave Britain. They would therefore no longer impose on the National Health Service nor take advantage of pensioners’ free prescriptions as well as free TV licences for the over 75’s, free bus passes
and winter power subsidies, all of which are paid for, not from the NI account, but from general tax revenue. This considerable expense would no longer be required. These net savings, less tax revenue lost, to the British Treasury and taxpayers, are reckoned
to grow towards £5-10 billions over the forthcoming decade or so. Such savings will make a big dent in the National Debt and should be seriously considered as part of the question, whether to change the pension payment policy or not. This is a much bigger
issue than just that of the annual cost of uprating all pension payments. The Government would be making a big mistake to ignore this issue, instead just “ring-fencing” the pension budget A study and report on this matter has been conducted by
Oxford Economics and presented to Treasury in the past 12 months.
Finally, in regard to cost, the decision in a recent, February 2013, UK Supreme Court case, O’Brien[Appellant] v Ministry of Justice2013UKSC 6, it was clearly stated by the judge, “budgetary considerations [costs]
cannot justify discrimination”: O’Brien’s appeal against his claimed discrimination was upheld and yet each year, through the Social Security Benefits Uprating Regulation 3, the British
Parliament annually legalises discrimination against 550,000 of its pensioners, justifying this action by a saving of some costs.
During a Committee debate on March 18th 2004 on the frozen pension issue, Steve Webb, the current UK Pensions Minister made several comments,
which indicated his support for uprating the pensions of all expats. He was at the time obviously concerned with, among other things, the morality of non-indexing. An edited version of some of his comments during that debate are shown below;-
purpose of my new clause is the pensions of those who now live abroad should be annually uprated where-ever they live."..."In the case of countries like Australia there seems to have been an oversight in the reciprocal agreements the payment of pensions
was covered but uprating wasn't" "We are now in an extraordinary situation."..."British citizens who have paid their national insurance all their life, accrued entitlements to a state pension and committed the misdemeanour, as it were, of moving
to Australia, New Zealand, or Canada instead of the United States do not receive an uprated pension" ...."Some of the principal agreements were signed in the 1950s when our culture as regards inflation was different" ..."Inflation was so low when the
levels could be left for a few years before introducing an ad hoc uprating" ..."The consequences of not uprating can be quite severe"http://www.guardian.co.uk/money/2012/may/08/state-pension-frozen?INTCMP=SRCH...."The
British Government are free riding on the welfare states of countries that British citizens are moving to" ..."We are asking other countries taxpayers to support our pensioners"... "The composition of the list of countries where one does have uprating
and the list of those where one does not is pretty odd".... "It hard to understand the logic".... "The entire pattern was arbitrary." "There is no logic to it and it is hard to justify the situation we are in." "The question relates to cost but sorting
out unfairness does have a cost"......We are not feathering the nest of the favoured few, but justice" ....The question is moral rather than legal ..."The moral claim rests on the fact that we have a contributory pension system .We ask people to
make contributions all their life to accrue an entitlement. Why should that accrued entitlement vary according to where they choose to live?"....That doesn't sit well with the idea of a contributory system”.... "Different Caribbean countries have
different rules which seem crazy." None the less the provisions seem odd." The world has moved on and peoples’ lives are more global; people are more likely to work overseas and their parents may want to go to live with them in retirement. Should we
penalise those who retire overseas to be with their children or should wesay 'You've worked hard and paid hard. It's your pensions take it with our blessing?”
Many Members of Parliament over the past 20 years
have expressed similar views but these appear to have been scotched by Treasury bent on austerity and in denial of the harm the Government’s approach is doing to the reputation of Britain as a forward thinking moral, fair minded society.
To concludeI wish to quote from Dame Joan Bakewell after the ECHR case Carson v the UK Government was announced;-
“There is another view aside from the niceties of the law: That it is a matter of
social justice. People paying insurance contributions in good faith, expected to get the same pension as their contemporaries, wherever they chose to spend their retirement. Geography should have nothing to do with it. Why should the same consequences not
follow if they retire to Canada, Australia, and South Africa, and yet apply when they move to, for example, Bermuda, Israel, or Croatia. By what sense of social justice can such discrimination persist? The [ECHR] judgment was narrow enough this week, and the
cases in favour of equal treatment are so persuasive that campaigners believe it can’t be long before justice prevails”.
James Tilley BA [Hons]. FCPA. ACMA.
British Pensions in Australia Incorporated, Phone +61 2 9521 7964