For many of the over 400,000 UK pensioners living overseas, this is a harsh reality. These are individuals, including veterans, who paid into the UK state pension system while they were working, who served the UK and contributed to its economy.
Yet because they chose to retire to Australia, Canada or other, primarily Commonwealth, countries – to be near family, or afford a modest life – their UK state pensions are frozen at the rate that was first paid, sometimes decades ago. Some must survive on as little as £20 a week.
This 70+-year-old UK frozen pensions policy reflects outdated thinking and a failure to keep pace with modern global mobility.
Getting an indexed state pension is a lottery
As things stand, 40% of UK state pensioners living overseas are denied annual increases solely because of where they live, yet the remaining 60% continue to receive upratings as though they had never left the UK. This postcode lottery is arbitrary, inequitable and can be deeply damaging to those affected.
Why do UK pensioners in the USA, European Union, Philippines, and Türkiye receive annual increases, while others are unjustly left behind? The disparity is stark: in Barbados or Jamaica, pensions rise annually; in nearby Grenada or Trinidad and Tobago, they stay frozen for life. Even pensions in the Falkland Islands – where Britain went to war – are frozen, while those in Gibraltar are not. Both are British Overseas Territories. The list goes on.
The UK is the only OECD country that freezes state pensions based on residency.
The UK government maintains that reciprocal agreements are required to uprate overseas pensions. Yet repeated overtures from both Australia and Canada, Britain’s oldest and closest Commonwealth allies and friends, to discuss such agreements are ignored. A 2013 freedom of information request (ref:592/2013) confirmed that no legal barrier exists to ending the freeze.
Case study
Consider the case of Anne Puckridge, a 100-year-old World War II veteran. After paying full national insurance and working well past retirement age, she moved to Calgary, Canada, at the age of 76, to be near family. Twenty-four years later, Anne still receives just £72 a week – the same amount as she was first paid in 2001. Had she remained in the UK or moved to the USA, her pension would now exceed £170 weekly. Inflation has steadily eroded her income. Canadian taxpayers now help her financially and with healthcare.
Government estimates of unfreezing pensions are disingenuous
Officials often point to the projected cost of £930mn per annum to uprate frozen pensions. But that figure assumes parity with UK payment rates, which past agreements have never included. Increases have only ever commenced on a going-forward basis, not retrospectively, and never to the same level as in the UK. In fact, the Department for Work and Pensions estimates the forward cost of unfreezing pensions in 2026/27 at just £60mn; less than 0.04% (essentially, a rounding error) of the £153bn state pension budget projected for that year.
Pensioners living overseas (in frozen and unfrozen countries) also ease the pressure on UK healthcare, long-term care and other services, at a saving of over £2.8bn a year. Imagine the cost and chaos if even just a small number of are forced, for economic reasons, to return to the UK?
Australia and Canada uprate their own state pensions regardless of where recipients live. Subject to eligibility, they may also provide pensions, health care and long-term care to immigrant residents, who may never have worked or paid taxes in the country.
The UK saves at the expense of frozen countries, which are left to shoulder the consequences of an unjust policy.
Political support for unfreezing
Opposition parties often tend to support unfreezing, but that all changes when they assume power. Labour pledged to end the policy in its 2019 manifesto, only to reverse its stance in 2024 – justifying its inaction by citing the policy’s longevity. But duration is no justification for prolonging injustice.
In spite of this, momentum for reform is growing. MPs from all parties, former pensions ministers Steve Webb and Ros Altmann, and veterans’ organisations all agree: the current policy is indefensible.
The crux of the issue is fairness and a lack of political will
Over 400,000 people are denied annual increases, while more than 600,000 receive full upratings. This disparity defies logic and cannot be justified on legal or financial grounds, as we have seen.
At a time when the UK is seeking to redefine its global relationships, it must also reflect on how it treats its own pensioners abroad.
If slogans like ‘Global Britain’ and ‘Britain Reconnected’ are to carry any real meaning, they must begin with fairness to and equal treatment of those who contributed to the nation throughout their working lives (not to mention the frozen countries helping to support those pensioners affected by this inequitable system).
It is time for the government to act. Unfreeze the pensions. Honour the promise. End the injustice.
