Frozen expat pension issue raised in Isle of Man

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The decades-old problem faced by British expatriates in certain countries whose State Pensions are not “up-rated” in order to keep up with inflation has unexpectedly surfaced in the Isle of Man, where it has emerged that Manx pensioners who retire abroad are subject to the same pension “freezing”.

The matter arose last week in Tynwald, as the Isle of Man’s Parliament is called, when treasury minister Alfred Cannan admitted, in response to a question put to him, that the Manx government’s hands were tied, as far as being able to do anything about the frozen pensions problem,  the Isle of Man Today reported over the weekend.

The issue was also recorded in the official minutes of the proceedings.

Officials from Jersey and Guernsey  – which like the Isle of Man are both UK Crown Dependencies – told International Investment today that they don’t freeze the pensions of any of their pensioners, even if they live in countries in which UK pensioners would have their pensions frozen.

The person who who raised the question in Tynwald was a member of the Isle of Man’s House of Keys named Dr Alex Allinson, pictured left.   In his comments to his fellow lawmakers, he noted that some 512 former Isle of Man residents now living in countries such as Canada, New Zealand and Australia have had their pensions frozen at the time they moved away, out of a total of 723 Manx pensioners who currently live overseas.

This appeared to indicate, Dr Allinson went on, that “Manx pensioners choosing to retire abroad can no longer rely on the state pension, and will need to take out extra financial provisions to maintain their standard of living”.

Cannan replied, according to the Hansard report: “By virtue of international social security agreements, the Treasury is legally obliged to follow the UK Government’s policy in this area, and it is therefore unable to unilaterally review the provisions by which pensioners living in certain countries do not benefit from annual increases to their state pensions.”

Cannan went on to explain how, after World War II, the UK Government entered into agreements with some countries but not others to “up-rate” the pensions of expats living in the other country, and that the Isle of Man, because of its Crown Dependency relationship with the UK, is covered by those agreements.

Cannan noted that the UK had been unable to fix the problem – which is said to affect as many as 550,000 of the estimated 1.2 million UK expats who live abroad – “simply because of the political decisions to focus and concentrate on pensioners resident in the United Kingdom, rather than deal with a number of issues and potential complications that could arise from up-rating pensions in countries for which there is no relationship, or social security relationship, with the UK”.

Dr Allinson later told International Investment that he had raised the question in Tynwald after the matter had been brought to his attention by a constituent, “and I thought it merited being raised in the House of Keys”.

“In essence the IOM government is tied to the same agreements [that the UK is],but I think it is important that pensioners considering retiring abroad are aware of all the facts, and make the right extra provisions to maintain their incomes,” he added.

Expat pensions ‘not frozen’ in Guernsey, Jersey

In response to a question on the matter, a Guernsey government spokesperson  told International Investment that the States of Guernsey’s Employment & Social Security office “does not freeze any of the Guernsey old age pensions paid to pensioners living overseas”.

“Pensions are being paid to approximately 17,700 people in total, of which around 6,000 live overseas,” he added.

“Most of the overseas pensioners live in the UK.”

A spokesman for the office of Jersey’s chief minister said: “We do not freeze pensions for people living outside Jersey – they are entitled to the same annual increase as people living in the island.

“As of Jan 2017, when we did the Annual Pension Statement, there were 12,808 OAP  claims for people out of the island.”

Frozen pension countries

Countries in which British and Manx expat pensioners don’t have their state pensions up-rated include some of the UK’s most popular retirement destinations, including Australia, Canada, New Zealand and South Africa.

Expats living in EU countries, the US, Turkey, Barbados, Israel and the Philippines, meanwhile, have their UK state pensions up-rated.

Lists of all of the “frozen” and “unfrozen” countries may be found on the website of the International Consortium of British Pensioners,  which says it compiles them from UK Department of Works and Pensions data.

As reported here last month, the front in the long-running battle to get UK expat pensioners state pensions up-rated at the same rate as those of their UK counterparts has moved to Europe, where 1.2 million British expats currently live,  and where the UK’s plans to leave the European Union have thrown the future up-rating of expat pensions in the EU into question.

The UK government has stated that it intends to continue up-rating the pensions of Brits resident in the EU, along with seeking to ensure that such other benefits they currently enjoy as their ability to obtain free healthcare from the national health services in the countries in which they now live will also continue, but as yet nothing has been finalised.

Setback in 2010

A long-running attempt by expat British pensioners to gain pension parity through the courts was dealt a major blow in March 2010, when the European Court of Human Rights ruled against them, holding that Britain’s refusal to link their pensions to inflation, the way it does those of retirees living in the UK and in certain other countries, was not discriminatory.

The battle has continued to rage on in the Houses of Parliament, however, and earlier this year, UK MPs voted in favour of a motion that would see the axing of the Government’s pension-freezing policy. Labour party leader Jeremy Corbyn has been among those calling for all expat pensions to be up-rated.