An apology
One or two people have noticed that I haven’t been responding to comments recently (particularly John Smith!). So firstly, I’d like to offer my apologies, while I always try to respond where possible, it’s been a particularly busy time with the passage of the Pensions Bill through Parliament.
To remedy the situation I thought I’d try out a different approach and use my actual posts to pick up and discuss a couple of the key themes I’ve noticed emerging from your comments. For ease of reference I’ve set them out under the headings below:
Voluntary Contributions
Some people like Rita wonder whether they’ll be entitled to a refund on the basis they will already have acquired more than thirty qualifying years for a basic State Pension prior to paying voluntary National Insurance Contributions by the time our proposals kick in for those who will reach State Pension age on or after 6 April 2010. The answer is “it depends”. Back in January, we announced that individuals who have paid contributions since 25th May 2006, who wouldn’t have chosen to had they been aware of our proposals may be entitled to a refund. However, generally no refunds will be available for voluntary contributions which have been paid prior to this date since they were paid properly at the time in accordance with the law and in line with Government policy. If you want to find out more it’s worth getting in touch with Her Majesty’s Revenue and Customs .
Overseas Pensions
The blog continues to receive comments from UK pensioners who live in certain countries overseas and are concerned about not receiving annual increases to their pensions. I know people have strong opinions on this matter of “frozen pensions”. In fact, it’s an issue that has been raised with many governments over the last few decades.
To clarify, at present the UK State Pension is only uprated where there is a legal obligation – for instance, where UK pensioners are living in the European Economic Area – and in certain other countries where there is a reciprocal arrangement in place, these include Israel, Turkey and the USA.
Our approach is a long standing one that has been shared between different governments, that is that the social security system is designed primarily for people living in the UK. Current estimates show that it would cost around £420 million a year to fully unfreeze the State Pensions to bring all pensioners living abroad up to the level with those living in the UK. This cost would also be higher in the future under our proposals to up-rate the basic pension in line with average earnings growth in the UK. This issue was debated during the Commons Committee stage of the Bill and there are no plans to change this policy.
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This entry was posted on Monday, March 19th, 2007 at 6:34 PM by James Purnell and categorized in General posts.
Alexander Leitch wrote:
A real worry for those with company pensions is the way they latest rules handle inflation. I understand that at 5% inflation, in 15 years my pension is down to 69% of its purchasing power. Another reason not to have a pension.
There needs to be better protection for pensions in payment against both government and trust changes after the retirement decision is taken.
Posted on 28-Mar-07 at 1:02 pm | Permalink
geoff kilsby wrote:
if a woman recieves a small state pension of 50 pounds per week she cannot live on that pension.if her husband gets 200 pounds per week pension then his wife cannot claim any extra state benefits .he is then supporting his wife but pays tax on any amount over his tax allowance.his wifes tax allowance is going to waste but the allowances cannot be coupled together, how fair is this after you have paid tax all your working life, and the government wants people to pay into private pension schemes. the government should get their house in order first
Posted on 28-Mar-07 at 1:03 pm | Permalink
Mrs Eda Hopwood wrote:
I paid into a voluntary works pension and also paid what was known as a full stamp,if uou were married you then had the choice,but am now being penalised as it brings our income as a couple over the limit to claim Pesion Credit,i would have been better off keeping my money in my purse like most of my friends did and who qualify for pension credit,and get all the extra perks like housing benefits,loft instalation etc.and the same income as we have.
Posted on 28-Mar-07 at 1:08 pm | Permalink
George Morley wrote:
How is it that the Actuary report this year shows that the surplus in the pension fund will be , and I quote ” #4,217 million for 2006-07 ” and is greater by #279 million than the forecast. This difference it says is insignificant. It would take about #400 million to pay the correct amount to every pensioner wherever they live which is not much more significant is it ?. The estimate of surplus by 2012 is expected to be over 90% of the required amount and the government say that they cannot afford it !!
Apparently there is a British Diplomats wife who is now a pensioner and she is having her pension frozen while they are away from the UK. What an injustice to every pensioner.
I wonder if MP’s are exempt from this policy if they choose to retire abroad ! An ex Pensions Minister Ann Widdecombe said to me that the cost of living varies tremendously from country to country and the whole point of uprating is to keep pensions up to date with the British cost of living. She also said that it would be prohibitive and so she could not sign the EDM. What a load of drivel that is. Hopefully many , many caring and responsible MP’s will sign the EDM 856 AND 1203 and any others that come along to get this DISCRIMINATORY policy changed. It can be done and the pensioners abroad are going to make more noise. The DWP has an Equality Scheme and Making things Fair. Well they can start right here.
Posted on 04-Apr-07 at 2:59 am | Permalink
George Morley wrote:
It would be very helpful if there was an explanation of ‘legal obligation ‘ and ‘reciprocal arrangements’ so that we can fully understand why the government insists on denying the pensioners who live in the old commonwealth countries the full pension that they have earned and paid for and deserve. The Actuary report this year clearly shows that the money is there in plenty and is growing to a point where they could pay a year of double pensions and still have a surplus. The MP’s either don’t know the full story and vote against this in ignorance or they are being told lies about the state of the pension fund or they don’t care about the pensioners. We will win our proper pension when the MP’s see that they are literally robbing people with no just cause to do so. Why is this pension any different to a private pension or a service pension or any other pension? Answers please !!
Posted on 05-Apr-07 at 3:38 am | Permalink
Alistair Montgomery wrote:
I am now retired living in Brazil after contributing to Social Security for 40 years. Nearly all my working life has been spent working aboard which earned money for the U.K. First sailing on Oil Tankers for 15 years followed by 19 years working for Lloyd~s Register of Shipping including four years on North Sea Oil Rigs. Then I opened my own inspection firm in Brazil with most of earnings being invested in the U.K.
Pensioners living abroad are not using the NHS Service or UK Hospitals which is a big saving for the Government even although we have all contributed into the Pensions fund the same amount. We have also inflation in the countries we live just like the UK and we have to pay all our health bills and no free medicines Yet the Government is wasting large sums of money to give immigrants in the UK these services free. Also the vast sums of money spent on the war in Iraq and Afganhistan to people who are not willing to fight themselves for their freedom.
Posted on 09-Apr-07 at 11:58 am | Permalink
Nick wrote:
You state that “the Overseas Pensions blog
continues to receive comments from UK pensioners who live in certain countries overseas and are concerned about not receiving annual increases to their pensions” as though you are tired of hearing about it.
Please remember, James, that we too are tired of hearing the same old lame excuses put forward to justify the parsimonious attitude of the UK government.
The UK was only too glad of our services during and after WWII, and in fact it was the government itself which urged migration to our dominions to ease the unemployment situation in the UK caused by the return and demob of so many servicemen, whose jobs had been taken over by women (bless them!).
Once they had gone overseas, they were forgotten. Out of sight, out of mind! Thanks, guys, for saving us! Now, stay out!
Nothing personal, James, but if it were not for the sacrifices made by these heroes, you would not be enjoying the freedoms you do today, and we’d be blogging in German.
Of course we keep repeating our demands for “fair play.” How can anyone subsist on a paltry “frozen” pension of just a few quid a week?
You further state that “the UK State Pension is only uprated where there is a legal obligation” to do so, a remark which beggars belief, because it makes a mockery of the word “morality.”
Like it or not, whether 420 million or 520 million pounds, the UK owes us ALL whatever we were promised, no ifs, ands or buts. Instead, the UK came up with a new rule during the middle of the game, and Joe Bloggs didn’t stand a chance of winning.
If an insurance company used that same rule, they would quickly be hauled off to court.
If the UK government weasles its way out of this, then “Shame on Britain!!!”
Posted on 10-Apr-07 at 10:23 am | Permalink
Mr Jim Tulip wrote:
Dear Minister
In your post “An apology”, on 19 March, you restate the policy that wasted VOLUNTARY CONTRIBUTIONS will not be refunded (except for those few made after 25.5.2006). Your justification for this appallingly unjust policy is your statement that “voluntary contributions were paid properly at the time in accordance with the law and in line with government policy”. This is pathetic. Although the statement is true, there is no logic to it. Consider the victims of the failed private pension schemes whom you are helping through the Financial Assistance Scheme (FAS), as highlighted in the recent Budget….did not they contribute to their schemes according to the rules at the time? Yet they are being helped by Government because their contributions were wasted, i.e. they produced no return - exactly the same position as voluntary N.I. contributors will be in under your proposed 30 year rule. (The only difference is that the private sector was partly to blame for the plight of the FAS people, whereas wasted voluntary contributions to the Basic State Pension are the sole responsibility of government). Surely you can see the inconsistency between these two Government policies?
Your refusal to refund voluntary contributions is another example of governments’ “moving the goalposts” on pensions. Because with pensions there is such a long time lag between contributions and returns, ‘moving the goalposts’ is bad. It saps people’s willingness to save long term. It will sap your ‘personal accounts’.
Also there is a ‘law and order’ consequence. In the tax, tax-credit and benefit systems fraud is already a big problem. If you treat the law-abiding citizen unfairly, his resentment may tip him over the edge. I mean, if all you get by sticking to the rules is a ‘kick in the teeth’, the temptation to try to fiddle the system must be greater - it is only human nature.
Just because voluntary contributors are a disparate lot, not organized into pressure groups, is no reason to ignore them and treat them unfairly. So I beg you to reconsider this question of refunds of wasted voluntary contributions.
Jim Tulip 16.4. 2007
Posted on 16-Apr-07 at 11:09 am | Permalink
Derek Male wrote:
My Comment, is about the frozen Pensions we expat’s in certain Country’s have to put up with, I am one of the many! I was born and bred in England, And served my Country in the Army on Active Service,awarded Medals, but because I Left the Country 30 Years a Go to make a new life for my Kids, I and others have been treated like Traitors,is’nt it time now Mr Blair, that this injustage was reversed. us Genuine Pensioners need the money more Than the hand outs given to the Hundreds of ILLegle’s flooding the Country.Please keep trying to give us a fair Go. Yours, Derek Male, Melbourne Australia
Posted on 20-Apr-07 at 4:13 am | Permalink