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British expats lose pension increase claim

Thu 18th Mar 2010

The European Court of Human Rights yesterday rejected an appeal by a group of expat UK pensioners calling for their payments to increase with inflation.

Currently inflation proofing only applies to UK pensioners who live in the European Economic Area or in 15 other countries. But a group of 13 pensioners living in countries including Australia and Canada were demanding that the UK Government change its pensions policy.

They claimed that the rules unfairly discriminate against them and nearly half a million other expat UK pensioners, in breach of the European Convention on Human Rights in an appeal against an earlier decision during a eight year court battle.

They wanted the UK to stop freezing their state pensions at the level paid when they reach retirement and said that some expats are receiving as little as £6 a week but should be entitled to annual inflationary increases as they paid into the system during their working lives.

But the ECHR rejected the appeal by an 11 to 6 majority and said that the decision not to index-link pensions was not discriminatory as the pensioners had chosen to live in economies outside of the UK. ‘To accept the arguments would be to lead to judicial interference in the political decision as to the redeployment of public funds,' the judgement said. If they had won the decision would have cost the UK government at least £500 million a year.

Those who retired in the early 1970s receive around £6 a week, while those retiring in the 1980s get £30 a week. This compares to the current state minimum of £95.25 per week, paid to pensioners still living in the UK.

Those living in certain countries with reciprocal arrangements, such as the US or EU nations, receive the payment increases. However, those in around 150 countries without such arrangements including popular expat locations such as Canada, South Africa, New Zealand and Australia have been denied the extra money.

Lawyers for the UK government had argued that the priority had to be to target money at the poorest pensioners living at home. The Department for Work and Pensions welcomed the ruling. ‘The court has found in favour of the government. We do not therefore plan to make any changes to the current arrangements, which allow for the exportability and up rating of UK state pensions,' a spokesman said.

‘We will, nonetheless, study the terms of the judgment carefully to ensure that we continue to comply with our obligations under the terms of the European Convention on Human Rights,' he added.

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