For the past 75 years successive British Governments have supported a frozen pension policy which was bought into effect when the economic circumstances effecting the United Kingdom were very different to what they are today.
The UK was part of the international agreement of 1944 which established a fixed exchange rate for the major currencies of the world, and this fixed rate combined with, at that time, low productivity growth, inflation, weak export performance, the costs of military commitments overseas including the Korean War and in Europe the BAOR, all combined to put pressure on the balance of payments so successive Chancellors looked for ways to curtail the outflow of foreign currency.
In those early years after the war emigration by British nationals was primarily to countries in what was then known as the British Empire, Canada, Australia, New Zealand and South Africa. Very few British nationals went elsewhere in the world.
Within the social fabric of the UK there is a mandatory national insurance scheme into which every employed person contributes, and on their 65th birthday they are entitled to apply for and receive their state pension. The size of pension is dependent on the number of years the individual has contributed, but it will be increased annually by the percentage of the cost of living. The pension is payable world wide no matter where the recipient has chosen to retire.
The policy of pension freezing was bought into effect some 75 years ago, and is based on the value of the pension at the time the individual emigrated from the UK whether they were still working or not, it made no difference. If a person still had 10 or 15 years of working life ahead the state pension they will receive will be based on the amount they would have received on the day they originally emigrated from the UK. In other words their state pension will never receive the cost of living awards pensioners living in the UK will receive, as will British nationals drawing their state pension and now living in the EU, the USA, and many other countries around the world. So as the years go by the purchasing power of the pension goes down. When the issue is raised with the UK government the excuse given is the UK government has no plans to change the existing policy. Meanwhile a 1/2 million British nationals are deserted by their government because they have chosen to live their retirement years in one of the older Commonwealth countries.
For the past 20 years the Canadian Alliance of British Pensioners (CABP) has been fighting the UK government to have the frozen pension policy changed, so all British pensioners are treated fairly and equally. Within the last 6 years this issue has received considerable parliamentary and media attention both within the UK and Canada, resulting in many more people becoming aware of this grossly unfair and out of date policy of the British government. Much more information can be found on the CABP web site.
Submitted by Peter Sanguinetti, Director of The Canadian Alliance of British Pensioners
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