The pensions minister has said there is no work going on at the Department for Work & Pensions to tackle the issue of frozen state pensions.
Baroness Altmann was speaking in the House of Lords yesterday (24 February) in response to questions about whether the government was looking into this issue.
In November the All-Party Parliamentary Group on frozen British pensions said it had discussed the issue with Oliver Letwin, the minister for government policy, who agreed to commission research on the financial case for reform.
Speaking yesterday Baroness Altmann said: “I have no information about any work that is going on in other departments. I can only report that in the Department for Work & Pensions no estimates are being made about the costs of up-rating frozen pensions.
“External sources have suggested that the costs of partial up-rating are estimated at around £200m a year by 2020.
“The speculation about potential savings were people to move back to this country has not been costed but the cost of full up-rating for the state pension in countries where it is currently not up-rated would be more than half a billion pounds a year.”
She added the government has made no assessment of the impact of this policy on pensioners’ choices of residence.
At the moment the majority of pensioners living in the UK have their pensions annually indexed or uprated according to the British inflation rate but this is only the case for ex-pat pensioners living in certain countries - such as the US, all European Union countries, Barbados, Bermuda and Israel.
Pensioners living in countries such as Australia, Canada, New Zealand and South Africa have their state pensions “frozen”.
According to the APPG on frozen British pensions, 550,000 British pensioners, 4 per cent of all recipients of the state pension and half the pensioners living overseas, are currently adversely affected by the government’s frozen pension policy.
Baroness Altmann said: “The government has a clear position which has remained consistent for around 70 years: UK state pensions are payable worldwide and up-rated abroad only where we have a legal requirement to do so.
“Australia is a very interesting example of one of the issues with potentially up-rating which is that the Australian pension system is means-tested and therefore the estimate is that over 25 per cent of any payment made to up-rate overseas pensions in Australia would merely go to the Australian Treasury.”