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Questions of Cash: Dispute over arrangements Down Under for UK pensions


Q  In reply to a letter [Questions of Cash, 16 March] you said that the countries where annual inflation-based pension increases apply includes Australia.  I understood that the pension increase does not apply to UK pensioners in Australia, Canada, South Africa and New Zealand.  What is the correct position?   SG, by email.

Q Your answer to JH says Australia is included in the list of countries where annual increases are paid on UK state pensions – are you sure?  Expatriates in Australia have suffered a significant fall in income from the UK as a result of currency movements – sterling buys less than 75 per cent the number of Australian dollars they bought in the period up to 2009.  My understanding is that their suffering is exacerbated by the unprincipled failure of successive governments to provide state pension uprating without regard to the current country of residence. I don’t understand how supposed “close connections” favour the Philippines and the United States, but discriminate against Australia, New Zealand and some of the West Indies.   AB, Surrey.

Your answer said that pensions for Britons who live in Australia are increased annually. No, they aren’t indexed once the recipient has started to draw them.  An organisation – BPIA, British Pensions In Australia – exists to fight this, but with no success so far.   JM, by email.

A We were misinformed and we apologise. The Department of Work and Pensions (DWP) website did not contain a list of countries where state pensions are annually uprated in line with inflation, so we took the information from the Money Advice Service – a government-established resource. 

We have now obtained from the DWP a definitive list.  Countries excluded from annual uprating do, as you all say, include Australia.  Other countries where a significant number of UK pensioners live and yet pensions are not uprated include New Zealand, Canada, India, Hong Kong, Sri Lanka, Malaysia, Nigeria, Pakistan, South Africa, Bangladesh, Japan, Thailand, Yemen and several Caribbean islands, including Trinidad & Tobago, St Lucia and Grenada.

A DWP spokeswoman explains: “The Government uprates UK state pension where there is a legal requirement to do so, either through EU regulation, or bilateral agreement.”

There was a bilateral agreement with Australia until 2001 under which UK state pensioners living in Australia had their upratings paid for by the Australian government. Since that arrangement ended, as with other countries where pensions are not uprated, the state pension paid remains static at the point where the pension was initially awarded.

According to a submission made to Parliament last month by the British Australian Pensioner Association, representing about a quarter of a million UK pensioners living in Australia, the uprating ceased because it cost the Australian government too much.  Australia now pays for the uprating of the state pensions of its retired citizens who live in the UK.

The Money Advice Service accepts that its website was incorrect. 

“We’re grateful to readers for flagging this to us and we will amend the content straightaway,” said a spokesman. “We have over 600 individual articles on our website and very occasionally something needs adjusting; whilst we always try to ensure that the content is accurate, the odd instance is likely to occur with a website of this size with such comprehensive content.” 

According to a 2011 report from Oxford Economics, the financial arguments for not uprating pensions for UK pensioners living abroad are unsound.  In the short term, the Government must pay more to the pensioners who live abroad and it will lose tax revenues on the incomes of the additional pensioners who become incentivised to move abroad.  But the report concluded that within the next five years, the savings achieved by not being liable for the health care and other welfare costs of the additional pensioners who would retire abroad would outweigh this.  Oxford Economics says that around 550,000 UK pensioners are affected worldwide by the current policy of not uprating pensions.

Q Can you help me with Hull Trains?  I bought a couple of tickets for a trip to London in a few weeks. I had to amend this when my wife was able to come along as well. My problems began when I tried to change the bookings and attempted to either obtain a £62 refund or amend the tickets.  There was conflicting advice as to how this could be done, so I bought two tickets for my wife and changed my time of travel.  I spent a long time with Hull Trains’ call centre being given different advice each time. On one occasion I had Citizens Advice telephone them. I was advised that Hull Trains’ system is not Mac compatible and making a payment or altering tickets using a Mac is not possible.  When I printed my tickets these stated that they cannot be amended.  I have found the website very frustrating, time consuming and expensive to use. KY, Hull.

Sandra Meek, Hull Trains’ business travel manager, apologises.

She says: “Having launched the new service as part of a number of measures to streamline and improve access to our tickets last year, this is the first complaint of this nature that we have received.  As with any new system there are always lessons we can learn about how we communicate user access and benefits and your feedback has certainly been very helpful. We have worked through each comment step-by-step and we can see where and why some of the confusion may have arisen.” 

Hull Trains has provided you with a phone line to resolve the problems.  The system is Mac compatible, but there may be some incompatibility with your software.

Questions of Cash cannot give individual advice. But if you have a financial dilemma, we’ll do our best to help. Please email us at: questionsofcash@independent.co.uk