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‘Frozen’ state pensions won't improve, says Altmann

Pensions minister Ros Altmann claims government cannot afford to help retirees struggling on ‘frozen’ state pensions outside the UK.

‘Frozen’ state pensions won't improve, says Altmann

Overseas retirees suffering the injustice of ‘frozen’ state pensions have had their hopes of rescue dashed by pensions minister Ros Altmann.

Around 1.2 million pensioners live abroad and draw the UK state pension but depending on where they live the amount they receive differs. Nearly half, or 550,000, of those pensioners have had their pension ‘frozen’, which means they are not entitled to annual increases in the state pension – known as uprating.

Those with ‘frozen’ pensions are only entitled to the sum they received when they first started drawing their pensions, with some living on as little as £6 per week.

Although the Cabinet Office had agreed to look at a plan to uprate such pensions proposed by the International Consortium of British Pensioners, pensions minister Ros Altmann has decided it is too costly to do so.

She told the House of Lords last week: ‘The government has a clear position, which has remained constant for around 70 years: the UK state pension is payable worldwide and is uprated abroad where we have a legal requirement to do so, for example in the European Economic Area or in countries where there is a reciprocal agreement in place that allows for uprating. There are no plans to change this.’

Altmann (pictured below) said the additional cost of uprating pensions of those who live in British overseas territories, such as the Cayman Islands and Gibraltar, would be £1 million a year. Extending this to all countries would be prohibitively expensive, she said.

‘Were this to occur, liabilities for pensioners who live in other countries and territories would also have to be met. The estimated cost of increasing pensions in those countries where they are not currently uprated would be over £0.5 billion a year. This would be financially unaffordable.’

The plan put forward by the ICBP and the All Party Parliamentary Group on Frozen British Pensions calculated the cost of uprating pensions by 2.5% a year from their current levels, without backdating the increases.

They found the bill would be £30 million in year one rising to £157.7 million in year five, although the groups argued the cost by then would still be equivalent to just 0.03% of total pension spending in the UK, and even after a decade it would represent only 0.31% of the state retirement budget.

Both groups have argued that uprating ‘frozen’ pensions could actually be cost neutral to the Treasury as it could allow pensioners to move abroad to live with family or to return to their country of origin, saving the UK money on health and social care and other benefits.

John Markham, director of the ICBP, rejected the argument that uprating ‘frozen’ pensions was too expensive and urged the government to consider other solutions. ‘There are many options available to the government when it comes to ending the long-standing injustice of frozen pensions, with full uprating being just one,’ he said.

‘Other options such as partial uprating are more than affordable even in the current era of spending constraints,’ he added. 

Markham said the cost of uprating this year was ‘just £30 million’ and claimed ‘there is growing evidence that this would be cost neutral to the government overall given the potential secondary benefits of doing so; removing the barrier to choice involved in moving abroad and thus reducing the burden on the NHS’.

MPs are now looking for new ways to tackle the government on the issue after an appeal for a Parliamentary debate was rejected.

Markham said the All Party group had taken a ‘proactive approach’ to solving the problem ‘but sadly the government are proving rather slow to act when it comes to ending this injustice’.

22 comments so far. Why not have your say?

Brian Corrigan via mobile

Mar 30, 2016 at 14:41

Altmann (pictured below) said the additional cost of uprating pensions of those who live in British overseas territories, such as the Cayman Islands and Gibraltar, would be £1 million a year. Extending this to all countries would be prohibitively expensive, she said.

Where does this come from? Gibralter is already indexed and what is the million pounds.Partial uprating would be 30 million pounds. The saving being made by frozen pensioners has been estimated and accepted by Government to be in the region of 3,800 pounds /year 2,128,000,000 pounds/year This needs a proper debate.

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Brian Corrigan via mobile

Mar 30, 2016 at 15:29

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George Morley via mobile

Mar 30, 2016 at 16:19

Just who does Ros Altmann think she is -head of the Treasury ?

The uprating of frozen pensioners is not a matter for her to decide but of parliament but the politicians have yet to honestly debate the issue which is a blot in the landscape of democracy as they have been using lies and deceit to cover their irresponsible theft of a pensioners right to an uprated pension by virtue of their contribution during their working life.

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Mar 30, 2016 at 16:58

Meanwhile unelected members of the big house can claim lots of lovely expenses etc.

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Phil Ibuster via mobile

Mar 30, 2016 at 17:27

Why have those resposible for administering the frozen pension policy suddenly begun spouting the "This policy has been around for a very long time" excuse? We know it has, but that doesn't mean it is fair, or just. By their standards, women wouldn't have a vote yet, and we would still have children working in factories and coal mines.What really gets my goat however, is that, after all of her apparent support of the "End frozen pensions" movement, Altmann does an about turn as soon as she is in a position to do something about it. Looks as though we will have to add her name to the Perfidious Politician list of infamy, alongside that of her predecessor Webb.

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Mar 30, 2016 at 17:45

Surprised there is only one comment so far - this subject usually brings them out in droves. There remain two problems with the argument, which is why both Labour and Conservative Governments have not moved on the issue.

First the group of expats involved is not homogenous - there are those who are well off, there are those who have gone abroad since the details of frozen rates were publicly known, there are those who went abroad when young and who frankly didn't give any thought at all to their pension entitlements many years further on, and then there are those who have some claim to be being misled/poorly informed. I have sympathies for this part of the group, particularly if they are now in financial hardship.

The second point is that however you dress it up, the full cost of uprating is now over £500m a year if backdated. If the UK electorate were given the option to vote for either an equivalent further cut in UK services or extra taxation, how many would support this as a priority? Personally I would vote for extra money to help pensioners in this country who can't pay their fuel bills and heat their homes properly.

Light blue touch paper and retire quickly......

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Michael Loveridge

Mar 30, 2016 at 17:53

Talk about poacher turned gamekeeper!

Ros Altmann had always complained how unfair it was for overseas pensioners to be denied uprating. In an article from the Telegraph just before her appointment ( the author reported:

"Finally, Ms Altmann said she would like to see the Government “look again” at the question of frozen state pensions for expats who live in certain countries such as Australia and Canada, something this newspaper has been campaigning for."

It's depressing how fast she's changed tack now that she's got her feet under the table. No doubt the government's tactic in appointing her as a minister was that it was better for her to be inside their tent pi**ing out than outside it pi**ing in!

It certainly seems to have paid off. What was that about power corrupting?

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Mar 30, 2016 at 17:54

There are special arrangements for public service employees who have been contracted out and have what is know as a Guaranteed Minimum Pension (GMP). If they move to a country where they wont receive GMP increases normally paid by the DWP, HMRC contact their pension scheme and make arrangements for the pension scheme to pay the GMP increase normally paid with the state pension.

As far as I am aware this only happens on public service schemes.

Have a look at a document issued by the Treasury, 24 May 2001


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Ian Phillips

Mar 30, 2016 at 18:53

What happened to the pensions for women of sixty who have been robbed.....this author was full of hope and good news for them prior to the budget?

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George Morley via mobile

Mar 30, 2016 at 19:07

But horshamtim, you are not correct in your comment that the pensioners affected are asking for backdating ! They have never asked for backdating but to be paid the uprated rate going forward from now as to do otherwise would be too much to ask even though the money that they have lost is due to a fraudulent policy by the government in the real world of pensions.

A private company trying to operate such a system would be in trouble for fraud.

The very fact thast these pensioners are not in the UK is saving the government money as they are not drawing the many benefits that they would if resident nor would they need the prescriptions and NHS services which the DWP now admit saves the government about 4000 pounds per year for each pensioner. Given the 560,000 pensioners affected means that 2,2 billion is saved each year which with the cost of paying the pensioners 580 million still leaves a saving of the difference. This has been admitted by the DWP and it seems that the government like yourself fail to see the gain and the logic of stopping the fraud and treating all pensioners equally !

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Mar 30, 2016 at 19:07

As mentioned above by Michael, Altman sold her soul for a place in the Lords and is now regularly trotted out by the Govt. to speak the party line on pensions.

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Mar 30, 2016 at 19:27

This is the person who was simultaneously a member of the Labour Party, the Tories and the Lib Dems, but now she is 'only' in the Tory Party. She said she joined them all to keep abreast of their policies. Why she couldn't have just read their manifestos to find out would be a naive question, I think.

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Jane Davies via mobile

Mar 30, 2016 at 19:45

Ian Phillips: There are plenty of articles concerning the WASPi women who will be robbed. This is about just 4% who ARE being robbed and have been for decades and unlike the WASPi's not one debate have they had, this theft is signed through every year. Ros Altmann was an advocate for the ending of this injustice until she went over to the dark side. Now she parrots the lies dished out by the DWP. In answer to an FOI number 595/2013 which was made to the DWP it states that NO reciprocal agreements are needed for the UK to uprate the pensions of British citizens, anywhere in the world, yet this lie is trotted out by any politician who is asked about this scandal. If all expat pensioners where frozen at least it would be a level playing field and everyone would know before they retire, but to up-rate the majority and to freeze a minority is blatantly unfair and discriminatory. If all of these pensioners, who by the way save the UK economy nearly 4,000 pounds a year EACH, were to come back to the UK the money would be found to pay them their annual cost of living increases. By the way FYI never has backdating been requested by the pensioners, even though many have been robbed of thousand of pounds over the decades.

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Mike R

Mar 30, 2016 at 23:23

well if they all moved back to the Uk. Then Government would have to be able to afford paying them . But come Brexit are more EU ex pats going to be cut off from what I still believe they could legally claim from Government . But I suppose it is fair that illegal immigrants to the UK should be provided with free board and lodging on arrival . The moral values of some politicians is unbelievable as they twist Government wishes to suit their politics. I still hope they collect their allowances and sleep well at night.

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Mar 30, 2016 at 23:50

"----or in countries where there is a reciprocal agreement in place that allows for uprating".

This long stated argument and excuse by successive governments has been proven to be wrong and no hindrance to correcting this injustice. Oh how this woman has changed her tune from a previous consumer champion in her desperation to please her new boss.

How about cutting the overseas aid budget and think about your own citizens more. The money to rectify this injustice is a pittance compared to the 12 billion pounds increasing to 16 billion by 2020 to be spent on questionable overseas aid.

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Jim Tilley via mobile

Mar 30, 2016 at 23:50

The Baroness utters the Department's mantra that the DWP cannot afford to up-rate all pensions equally, as most reasonable British people would expect of its Government, and as the Baroness in her previous role with SAGA was promoting. However she is now selling the myopic message from the DWP, which totally ignores the potential benefits to the budgets of other Government departments like Health and those departments responsible for funding winter power subsides and free bus passes for pensioners. For by up-rating all pensioners' pensions, as is practiced by every other OECD nation except the UK, thousands more, especially from the UK's Black and Ethnic communities, would be more likely to emigrate from the UK back to their cultural homelands. Thus reducing and saving costs incurred by the National Health Service and on winter power subsides etc. Up-rating the few frozen pensions for just 4% of the UK's pensioners who happen to live overseas should be regarded by the British Government as an investment, not a cost by DWP, with a payback within a very few years, even less so with partial indexing, and a worth-while investment, which should be given the tick of approval by Treasury, which appears unable or perhaps unwilling to demonstrate any business acumen in handling this issue. As one savvy MP opines, "the current practice/policy is economic foolishness";

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Mar 31, 2016 at 02:06

When I was invited to make voluntary contributions, from Canada, towards my future pension the sums went up from time to time. You could call them "uprating " because living costs etc gradually go up. But when it comes to receiving my pension the uprating doesn't seem to apply. If I lived one hours drive south in the USA my pension would be indexed. Where the hell is the logic? I feel cheated by the British government. And for me that is a terrible thing.

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john west via mobile

Mar 31, 2016 at 03:29

Well are we all not surprised and have been campaigning so very hard on yes it is barbaric and totally discriminatory on the frozen pensioners and just because the same for 70 years does not ofcourse mean that it is fair.

We have contributed as much (if not more) than other people to get the same State Pension and see The Pensions Minister 30/3 talking about cost, which are widely totally untrue.

Yes indeed treat each illegal immigrant and let's face it quite a few of our own UK Citizens with free accommodation and benefits, for which they have not contributed one single penny and ofcouse 0.5 billion a day found at the drop of a hat for foreign aid. It is so scandeleous and barbaric and sort this total unfairness out, but the powers that could (are we surprised ) refuse to do so. Obviously they can slle at night and not got any conscience at all, with millions in their bank account and the same in assets. Public servants cough,cough and we work for you cough cough.

See this new person at the DWP promising much. Well thanks for nothing all of you and obviosly you can sleep at night and each year vote for huge increases in salary and no doubt fiddled expenses, not that you need it.

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Hugh M

Mar 31, 2016 at 05:20

Two faced becomes multi faced. Clearly it is not too costly to provide support for immigrants who have contributed nothing at all. And why is that? Because they are being given the pension increases earned and paid for by ex pats. Robbing Peter to pay Paul? No, just plain ordinary theft. Criminal.

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john west via mobile

Mar 31, 2016 at 07:26

Dear Editor

Sent a post much earlier and definately polite.

Seen this article this morning and makes my blood boil. She is citing huge costs, but frankly her figures totally wrong and yes the DWP has agreed that each expat pensioner saves the Government about 4,000 pounds a year. Why is it that half receive the year on year increase and the other half have nothing. Wher is the logic and also if living of all places the USA then they get the uplifting every year.

How about taking a look at the illegal immigrants, who have a house and food for absolutely zero contributions and also the Foreign Aid budget of billions upon billions and rising and yet a pittance to upgrade the frozen pensiners. Barbaric and total discriminatory.

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Jane Davies via mobile

Mar 31, 2016 at 16:47

Where is my comment made yesterday?

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Daniel Grote - Citywire

Mar 31, 2016 at 17:01

Hi Jane - sorry, there has been a problem with a number of comments from mobiles made on this story not showing, they should all be visible now.

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