Pensions Bill

Written evidence from Clive Anthony Evans (PB 03)

Submission to the Public Bill Committee on the Pensions Bill from Clive Anthony Evans, an individual, former UK resident of Cannock Chase District now residing in Thailand since 2008 and in receipt of a UK State Pension.

My previous submission to the House of Commons Select Committee was not passed on to the Committee due to the high volume of submissions regarding Clause 20 – hence my comments regarding Clause 27 were not considered.

The Pension Bill 2013

PART 1

Clause 20

1. My main concern is in respect of the proposal to continue to deny up-rating of pensions to pensioners living in certain countries. I have other concerns relating to Bereavement Support Payments which I address towards the end of this submission.

2. Clause 20 provides enabling legislation - 81. For overseas residents, regulations may provide that such a person is not entitled to up-rating. This will enable similar provision to be made as under the current retirement pension system. Regulations under this clause will be made taking into account provision under relevant treaties, such as those in respect of the European Union, and bi-lateral treaties providing for reciprocity in social security matters and which cover up-rating.

3. The House of Commons Library Standard Note SN/BT/1457 states:

4. There is, therefore, no need to differentiate between pensioners residing in different countries by reference to the existence of such reciprocal agreements. This has been recognised by Ministers. The use of enabling legislation provisions could remove this discriminatory treatment of pensioners that has been in use since Clement Atlee introduce it in 1946 on the basis that only rich people could afford to live abroad. In my case I live in Thailand because my wife has a dependent mother and two sons there and it would be both impractical and probably impossible for us to take them to live in the UK. However, I am enquiring about the benefits that would arise were that the case and my UK State Pension was up-rated.

5. In a Standing Committee debate on the Pensions Bill in session 2003/04 the current Pensions Minister proposed:

6. He then stated

(ref www.publications.parliament.uk/pa/cm200304/cmstand/b/st0403/8/am/40318s06.htm)

7. In the Referral (Appeal) to the European Court of Human Rights in the case for up-rating that was found in favour of the UK Government on the basis of 11 for and 6 dissenting, the published views of the Dissenting Judges includes the following statement :

" The pension system of the UK is logically designed to take into account the needs of those residing in the UK, which is presumably the case of the vast majority of pensioners.  But that is no justification for subjecting pensioners who choose not to live in the UK to extremely unfavourable and unequal treatment in comparison with those who do.   There will of course always be differences in depreciation rates for pensioners residing in other countries, depending on exchange rates, the comparative cost of living and other factors. But these factors do not preclude the accepted fact that, at least based on the experience of a century, the depreciation of UK currency is undeniable and unavoidable, and in the space of a few years such depreciation results in an irreparable deterioration in the real value of pensions paid to persons not residing in the UK. Therefore, the complete denial (as is the case) of any formula for up-rating pensions of pensioners not resident in the UK (whether or not the aforementioned factors are taken into account) represents  a disproportionate difference in treatment for which there is no convincing justification".

8.           Other views from UK Lords On 25 Oct 2005. Baroness Greengross said "That this House regrets that the Government have not considered up - rating the state pension rights of all United Kingdom citizens living abroad in the Social Security Benefits Up-rating Regulations 2005", and quoted Lord Carswell ’ s devastating indictment of the policy. "Once it is accepted that pensions should be paid to contributing pensioners resident abroad, then no justification remains for paying some less than others and less than UK residents".
Lord Jones of Cheltenham 25 Oct 2005 said the Minister may say that that has been the policy since 1948, but, if the policy is right, why are almost half the pensioners who went abroad not uprated? I know it is about agreements, but this is about fairness. The Government need to consider it seriously. I know that it will be expensive, but it does not mean that it is not the right thing to do.

W orkers and employers buy their state pension in a system that the internationally renowned Lord Goddard Q.C.called a virtual contract – you get out pro-rata what you paid in. T herefore frozen pension s break that virtual contract.

9. Let me just comment that National Insurance is a compulsory scheme and, therefore every earner has contributions deducted at source or pays direct if self-employed. The expectation is an index-linked pension on retirement and free health care; other benefits are discretionary and ex-patriot pensioners recognise that they forego these on becoming non-resident.

10. However, following on from the mission statement made by David Cameron on forming the coalition in May 2010 ‘fairness in everything we do’, fairness means all who pay into the club receiving equal benefits with respect to pensions. This is not the case as a pensioner who emigrated in 1982 still receives £29.60 a week compared with the current £107.45.

11. I n recent news about the House of Commons debate and its decision on the issue of marriage of gays and lesbians David Cameron was quoted about this matter being "an issue of equality".  I find it incredulous that equality can be invoked to support the marriage of gays and lesbians but not, so it seems, for indexing pensions for al l UK State pension recipients living abroad. 

12. Nick Clegg claimed recently that spending £12 billion on foreign aid was ‘morally right’ and ‘the right thing to do’. This is surely the time for Government to do what is morally right for British pensioners as well, simply by treating them all equally. We are British citizens and we have been ‘triple locked’ out! At a time when the UK is paying billions into the EC, an organisation whose accounts have never been signed off by auditors!

13. In the latest January 2013 UK Government Actuary Dept report. The forecast NI account balance at March 2013 is approx £31 billion but it falls quite drama tically over the next few years, due to the assumpti ons mainly it seems due to low  wage and salary growth figures he uses, but the balance never breaches the 1/6th payments balance which the Actuary says is required, so that no Government support [Treasury Grants] for the NI Fund, are required over the 5 year forecast period.

14. In actuality, this balance is arrived at after contributions are made to the NHS and the interest from the fund is used to finance other Government expenditure which might otherwise be funded from other sources, such as the foreign aid budget, the child benefit budget for non-resident dependents of EC ‘citizens’ residing in the UK etc etc.

15. The ‘pro-forma’ response from DWP when challenged on this issue is that we knew the situation when we left the UK. That is just a refusal to accept that the policy is morally wrong. I know the European Court found there was no discrimination involved, even though those receiving up-rating are ‘victims’ of positive discrimination. The UK barristers also claimed we made no contribution to the UK and therefore should suffer; on that basis why does the UK Government up-rate pensions for residents of Israel, USA etc?

16. The Secretary of State has mentioned an estimated cost of £650 million to up-rate all pensions indiscriminately; what he has not taken into account are the cross-sector benefits. This is the cost to DWP but savings are forthcoming to the Exchequer . I, and many other non-resident pensioners, make a contribution to the UK economy. I currently pay UK Income Tax on my occupational pension at the rate of 20%, I pay in excess of £1,800 a year for medical insurance at the age of 71, I save the UK economy around £3,000 p.a. based on savings on benefits offset by no contribution to VAT, Council Tax and other non-income taxes. My income has become depreciated on a year by year basis due to my UK State pension being frozen, the falling exchange rate and the cost of health care increasing.

17. Were my State pension to be uprated in the same way as for those UK pensioners living in the Philippines, Israel, USA or any EC country I might be able to manage to offset the effects of UK Income Tax. As it is I am making enquiries about the benefits I will get if I decide to return to the UK. I am sure it would be more costly to the UK economy if I returned, certainly more than the cost of up-rating my pension.

18. I note that the Medical Insurance (Pensioners Tax Relief) Bill 2012 does not apply to non-UK residents, despite the fact we are saving the UK economy thousands of pounds a year. I know this is outside the remit of this Sub-Committee but mention it as a further reason to support up-rating of our State pensions.

Clauses 7 to 9 incl

19. I now turn to the provisions of the Bill relating to my wife, who is 21 years younger than me. I was advised by The Pensions Service that she would, on my death, receive Bereavement Grant and Bereavement Benefit, later receiving a State Pension on reaching State Pensions age. I note that under Clauses 7-9 of Part 1there is a ‘back door’ enabling provision to allow a reduction of the Pension in certain cases, in fact the Government has recently announced that foreign spouses will no longer be entitled to a State Pension.

20. This should be addressed alongside the up-rating issue as the two, in the cases of non-UK residents, are basically interrelated.

PART 3

Clause 27

21. Similarly, the change to Bereavement Support Grant and Bereavement Benefit to introduce Bereavement Support Payment in Part 3 Clause 27 (2) suggests the enabling legislation may be discriminatory against widows of non-residents. I’m hoping that this does not mean my widow would be denied the opportunity and the means to dispose of my body and to transit into widowhood. I think there is a need for an ‘avoidance of doubt’ reference here to clarify this. Further clarification is necessary.

PART 5

Clause 37

22. I am aware that any Statutory Instruments specified and arising from these enabling provisions would not undergo the scrutiny that is afforded to the Bill and would like to know that these points are discussed prior to any subsequent enactment.

June 2013