Livewire - June 15, 2011

Tony Bockman

Tony Bockman

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By Tony Bockman, Chairman of the International Consortium of British Pensioners

I’D like to tell you the parable of Britain’s second-class pensioners.

It does indeed convey a moral lesson, but it’s a lesson in the immorality of the British government’s policy of freezing the basic state pensions of more than half a million pensioners, just because of where they have chosen to live overseas in their retirement years.

More than 12.5 million people receive the basic state pension.

All of them contributed similarly to that pension through their compulsory National Insurance Contributions (NICs).

Of those 12 million plus pensioners, more than one million now live outside the UK – overseas!

Half of those receive the same annual uprating as the pensioners who still live in the UK.

The other half do not receive any increases – ever.

Their pensions are permanently frozen at the level at which they first received them in their country of residence, solely because of where they have chosen to live in retirement.

The parable is about second class pensioners, Joe and Joyce Pensioner, who now live in Canada.

Joe Pensioner worked his whole life and qualified for a full Class A pension of £52 a week when he reached retirement age in mid-1991.

His wife, Joyce, had spent a good piece of her life staying home and looking after their two kids but she qualified for a Class B pension of £31.20 a week, based upon Joe’s NICs.

Joe and Joyce had already decided that, when Joe retired, they would move to Canada to be closer to the kids and the grand children.

It’s 20 years on and Joe and Joyce are relatively healthy 85 year olds.

Problem is their basic state pensions are still at exactly the same rate they were when they arrived in Canada in 1991.

Had they emigrated to the USA, just 50 miles south of where they now live in Ottawa, Joe would be getting £102.15 a week and Joyce £61.20 a week.

Second-class pensions.

No pension scheme should be able to penalise its beneficiaries by reason of where they choose to live, especially when the number of years of contributions to the scheme directly determines the amount of pension they will receive.

Consequently, more than half a million pensioners have made first-class contributions to a second-class pension; that is morally wrong.