The UK State Pension is payable worldwide and is uprated abroad where there is a legal requirement to do so. In some countries, however, there is no agreement with the UK for securing the social security rights of people moving between the two countries. As a result, pensioners who move to these countries still receive the State Pension but do not have their payments uprated as they would be for UK residents. The Department for Work and Pensions endeavours to make this clear to those thinking of moving abroad and publishes guidance on its website.
It has been and remains the policy of successive governments not to enter into new agreements with countries or territories where this would include up-rating pensions in order to contain the long-term cost of the UK social security system. This issue has been examined extensively by the domestic courts, culminating in a ruling by the European Court of Human Rights in 2010. In all these cases the courts have found in favour of the Government.
The Government points out that uprating the State Pension in these countries would incur significant cost and it is preferable to focus constrained resources on pensioners living in the UK. It is estimated that the cost of uprating pensions in this way would be approximately £500 million per annum and in response to a question in the House about this earlier in the year, the Minister said:
“The policy on uprating pensions abroad is a long-standing one of successive post-war Governments. UK State Pensions are payable worldwide, however they are up-rated overseas only where there is a legal requirement to do so.
There are two main reasons for not paying annual up-ratings to non-residents. First, up-ratings are based on levels of earnings growth and price inflation in the UK which have no direct relevance where the pensioner is resident overseas. Second, the cost of up-rating state pensions overseas in countries where we do not currently up-rate would increase immediately by over £0.5 billion per year if all pensions in payment were increased to current UK levels.”