Simon Read: What made the minister change his mind about the retired Britons with frozen pensions?


Simon Read
Friday 24 January 2014 21:30
Steve Webb may be out of step with the public over the freeze on state pension entitlements for people living in certain countries
Steve Webb may be out of step with the public over the freeze on state pension entitlements for people living in certain countries

Regular readers will recall my articles about overseas pensioners and the anger felt by around half a million of them who have had their state pensions frozen.

Where people feel they are getting a raw deal, the controversy is a matter of geography – retire to the wrong country and your pension is frozen at the rate it was when you left Britain. So anyone moving to Canada, for instance, has their state payout frozen. Meanwhile those moving just over the border to the US enjoy annual increases just as if they'd stayed at home.

Many of you have written in with your views. Some feel that it's pensioners' own fault: they knew the situation before they left the UK and so shouldn't complain now. Others presume that the pension shortfall must be being made up in the countries that people have moved to.

On the latter point the answer is no, as far as I can find out. On the former point, I have been sent several emails by people who were not told by the Government that their pension would be frozen. They only actually discovered that this would happen when they didn't get their annual increase.

My view is that it's about fairness. All the pensioners involved paid their national insurance contributions during their working lives. Part of that money that they handed over to the Government would, they were led to believe, give them full rights to a state pension when they retired.

For the half a million or so pensioners who moved abroad to the "right" country, the state pension has been paid out as promised. For the other half million or so who unfortunately picked the "wrong" country, payouts have ended up being much smaller than they expected.

All they want is parity with their neighbours. I think they have a fair case so, when I met the pensions minister Steve Webb this week, I put it to him.

I was hopeful of a positive response as, when he was in opposition, the Liberal Democrat MP tried to insert a clause in the then Pensions Bill that would have abolished pension freezing.

At the time, 2004, he had said: "The purpose of the new clause is to provide that the pensions of those who now live overseas should be annually uprated, wherever they live.

"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?"

A decade later I trusted that he would be of similar mind. I was sadly mistaken. "It is a question of cost," he told me, adding, as if to shut me up: "We've fully debated the issue in Parliament."

When challenged on his earlier support for those with frozen pensions he blithely said: "Look, the fiscal position was different in 2004 than in 2014."

I don't know what has changed his mind. Mr Webb seems a decent person, but casting aside a cause he'd previously fought for looks like the act of a politician more concerned with his career than justice. Maybe he's got one eye on next year's election and wants to keep in with his coalition partners in the Tory party.

Or maybe the modern-day Sir Humphreys in the Department for Work and Pensions have made him believe that his role is to protect the public purse, rather than look after the public wellbeing.

Well, here's a warning to Mr Webb – and whoever takes over as the next pensions minister: this issue will not go away. Pensioners who feel badly let down by the British Government will continue to fight for their cause.

And with next year's election in mind, all politicians would do well to take note of a survey conducted this week by the International Consortium of British Pensioners. About 60 per cent of those asked agreed that pension freezing is not a good way to treat British nationals who have contributed to the economy by paying taxes and national insurance for a number of years.

And, crucially, nearly half those polled said they would vote for a political party with plans to unfreeze the pensions. You have been given fair warning, Mr Webb.

Twitter: @simonnread

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