The decision is expected at 11:30am Strasbourg time.
At issue is whether expatriates living in such countries as Australia, South Africa, Hong Kong and Canada – who receive UK pensions after having paid National Insurance contributions while still living in Britain – are entitled to receive the same annual inflation-linked increases that are given to those still resident in the UK, as well as to British expats living in such other countries as the US and European states.
Seven of 12 most popular on list
Seven of the 12 most popular overseas retirement destinations among British retirees are on the UK’s frozen-pension list, an Alliance & Leicester International study found last year. They are New Zealand, South Africa, Dubai, Canada, Australia, Singapore and Hong Kong.
A website that identifies itself as representing the interests of British expats whose pensions are frozen, www.Pension-Parity-UK.com, says that approximately half of the 1.1m UK expatriate pensioners worldwide have their pensions frozen, even though a large percentage of them live in Commonwealth nations and British Overseas Territories.
The case went to the European Court of Human Rights (ECHR) in 2009, but dates back years and has its origins in a suit brought by Annette Carson, a British national who lives in South Africa. Carson’s claim got as far as the House of Lords before it was dismissed on appeal in May 2005.
Later that year, she and 12 other expat pensioners moved on to the ECHR, where last year their application was referred to the final appellate stage, the Grand Chamber, after a lower ECHR court rejected it in November 2008 by 6 to 1.
Reciprocal agreements
The UK has argued that the decision whether or not to "up-rate" UK pensions paid to expats has to do with reciprocal agreements it has with the individual countries in which these expats live. Britain has such arrangements with its 26 fellow EU countries as well as with the US, Iceland, Liechtenstein, Norway, Switzerland and Turkey.
This means that UK pensioners living in the US or France have their pensions increased in line with the increases enjoyed by pensioners back home in Britain, because, UK officials say, the US and French governments have agreed to boost the pensions of American or French retirees living in the UK.
But for those in countries where the annual inflation increases are not paid, some expatriates receive pensions that are half what they would be if they lived in the UK.
The UK Treasury will be as interested as the expatriate pensioners in Tuesday’s outcome, as it would not welcome the news that it would have to find more money for pensions at a time when it can little afford additional expenditure.
UK pension ‘£95.25’
As Skandia International’s head of tax and product law Rachel Griffin noted here in September, the basic UK state pension for 2009-10 for a single person is £95.25 a week.
However, Annette Carson, the British pensioner whose initial suit formed the basis for the ruling due on Tuesday, currently receives only £67.50 weekly in basic state pension, which she began to take in 2000, Griffin said.
Carson also receives £32.17 in SERPS (the State Earnings Related Pension Scheme) benefits and £3.95 graduated pension.
Unless the European human rights judges find in her favour on Tuesday, her pension will remain frozen at £67.50 for the foreseeable future, no matter what happens to inflation.
"[Carson] spent most of her working life in the UK, paying National Insurance contributions in full," Griffin wrote in IA.
"She emigrated to South Africa in 1989 and has been regarded as a South African resident since 1990. From 1989 to 1999 [she] continued to make voluntary National Insurance contributions to maintain her entitlement to a full state retirement pension.
“If [her] basic rate pension had benefited from inflation increases [since 2000], it would now be worth £82.05 per week.” This is a difference of more than £750 a year.
Because there is no state social security system in South Africa, Carson argues that she is reliant on her British pension to support her in her retirement, according to Griffin.
‘UK benefits when expats go abroad’
The Pension-Parity.UK website, meanwhile, argues that the UK benefits financially in having pensioners move abroad and stay abroad for the remainder of their lives, and notes that concerns about having to make do with a frozen pension actually causes many to stay in Britain.
“The UK Government’s own figures reveal that “every individual resident in the UK over the age of 60 costs the UK taxpayer £7,000 per [year] in terms of added benefits and a share of National Health Service costs, [which is] seven times…the estimated [added] cost per capita” of index-linking those frozen expat pensions," the site notes.
A complete list of countries where UK pensioners’ pensions are frozen is at the Pension-Parity website at: http://www.pension-parity-uk.com/pension-rights.htm#Are YOU frozen or are you not .
