British pension: good for a whinge

When retirement time comes, British migrants in Australia are finding they have more than ever to complain about.

By InvestSMART · 17 Apr 2012

By InvestSMART ·
17 Apr 2012

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When retirement time comes, British migrants in Australia are finding they have more than ever to complain about.

WHEN retirement time comes, British migrants in Australia are finding they have more than ever to complain about: they get only a fraction of the generous pensions they would have enjoyed had they stayed home.

Foreign Minister Bob Carr is about to join a long line of Australian politicians complaining that British migrants to Australia do not have pensions indexed to inflation, yet those who go to most of Europe, the US, Israel, the Philippines, Turkey and some Caribbean islands are fully indexed.

Senator Carr has announced he will raise the issue with his British counterpart, William Hague, when they meet during his visit to Britain.

Unlike in Australia, British pensions are not means tested, so everyone gets one based on the amount of contributions the person has made. And when people migrate to a country such as Australia, Canada, New Zealand or most other parts of Britain's former empire they get only the monetary amount they are entitled to when they retire and this amount does not change.

Of about 250,000 British pensioners in Australia, about half have their British pensions topped up by CentreLink. Australians who qualify for a pension and live in Britain, get their full Australian pension.

The founder and chairman of the pressure group British Pensions in Australia, Chris Tilley, said the reason for Britain's different approaches to different countries was unclear and removing the inconsistencies and indexing all pensions had been recommended by reports to its Parliament.

'They are the only country that does this. If someone goes to live in Jamaica or Barbados they get the full pension, but not if they go to any of the other islands of the Caribbean. There are lots of migrants from the West Indies who would love to return to their warm island when they retire, if they could get an indexed British pension, which would relieve Britain of other costs to these people including the National Health.''

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Frequently Asked Questions about this Article…

Why do British migrants in Australia get only a fraction of the British pension they would have received at home?

Many British migrants in Australia receive only the fixed monetary pension entitlement they earned before migrating rather than a pension indexed to inflation. The article explains the UK does not index pensions for people who move to some countries (including Australia), so retirees get the amount they’re entitled to when they retire and that amount does not change over time.

Which countries receive fully indexed British pensions and which do not?

According to the article, British pensions are fully indexed for migrants to most of Europe, the US, Israel, the Philippines, Turkey and some Caribbean islands. By contrast, migrants to countries such as Australia, Canada and New Zealand generally do not receive indexation and get only the unchanging monetary entitlement.

What does it mean for a pension to be 'indexed to inflation' and why is that important for retirees abroad?

An indexed pension is adjusted regularly to keep pace with inflation, protecting retirees’ purchasing power. The article highlights that lack of indexation for British migrants in Australia means their pension value can erode over time, which is a key concern for retirees planning long-term income overseas.

How many British pensioners live in Australia and how many get a Centrelink top-up?

The article states there are about 250,000 British pensioners in Australia, and roughly half of them have their British pensions topped up by Centrelink.

What is a Centrelink top-up for British pensioners in Australia?

A Centrelink top-up refers to Australian social security payments that supplement some British migrants’ pensions so their income in Australia is increased. The article notes that about half of the British pensioners in Australia receive such top-ups from Centrelink.

Who is raising concerns about unindexed British pensions for migrants in Australia?

Foreign Minister Bob Carr is reported to be raising the issue with his British counterpart William Hague during a visit to Britain. The article says Carr will join other Australian politicians in complaining about the lack of indexation for British migrants in Australia.

What does the pressure group British Pensions in Australia say about pension indexation?

Chris Tilley, founder and chairman of the pressure group British Pensions in Australia, says the UK’s inconsistent approach to different countries is unclear. He notes reports to the UK Parliament have recommended removing inconsistencies and indexing all pensions so migrants would receive inflation-adjusted payments.

Could indexing British pensions for migrants have wider benefits, according to the article?

Yes. The article quotes Chris Tilley saying that indexed British pensions could enable migrants (for example, from the West Indies) to return home in retirement and that doing so might relieve Britain of other costs for those people, including some National Health costs.