Tuesday, 27 September 2022

The pound and the UK pension overseas

 Yesterday, I tweeted the following, occasioned by the British pound's nosedive to something close to parity with the peso

 The way the UK treats pensioners overseas is not particularly fair.

Your pension is paid in UK pounds, which means that its value varies with the exchange rate, meaning that what you end up with is different every month. Perfectly understandable.

Crucially though, if you live in Australia, and some other countries, but not if you live in an EU member state, there is no CPI indexing.

If the pension was indexed, you would expect it to increase in line with the cost of living, and given that the UK imports a lot of what it consumes this would reflect any fall in the exchange rate. 

If it's not indexed, you pension is worth less, which is the situation in Australia.

Fortunately, I am well enough off to be able to cope with this. Equally if you get an Australian old age pension - which is means tested - Centrelink, the body which administers pensions applies some arcane and impenetrable algorithm to adjust for this

which of course means that the Australian government ends up compensating you for your shabby treatment by the UK.

The question really is one of fairness.

If, like me, you worked half your life in the UK, paid your taxes, paid your national insurance contributions, you would expect to be treated equally with someone  who worked their whole life there.

Even more bizarrely, if I were to return to the UK, even for a short period of time, I can apply to have my pension increased to the current UK rate, but only for the time I'm in the UK (or one of the countries where indexing applies, meaning that I could in theory spend the northern summer on a beach in Portugal, and get the current, indexed, UK pension rate)

Basically, the situation is not fair.

And there's no one really to complain to.

After fifteen years away, the UK government takes away your right to vote in a UK election (which is fair) which means you cannot complain to your MP.

Essentially you are left out to dry

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