Pensions suffer in Britain's big freeze
There is a segment of Australian society that is doing it tough, but hardly rates a mention. They are the British pensioners who have decided to make Australia home, often to be with family members. Britons living in Australia on their British age pensions have been losing out as the Australian dollar soars in value against the British pound.
The British age pension is buying much less than it did before the onset of the global financial crisis in 2007. Then, one British pound bought $2.50, and is now buying about $1.50 - a depreciation of purchasing power of about 40 per cent over the five years. Many British retirees living in Australia will have far less buying power than when they first arrived.
But those on British age pensions have not only been losing out on currency exchange rates. There is the additional and long-standing problem that Brits living in Australia do not have their pensions indexed for inflation by the British government. The British government "freezes" the pension at their pound amounts at the time the Briton emigrates. The effect of inflation on buying power is devastating over longer periods.
Australian governments have been trying to get the British government to index the pension for years. Apart from the expense of indexing, the British government has probably felt less pressure to unfreeze pensions because many countries, such as Australia, allow their British pensioners to access the age pensions of their social-security systems.
Mike Goodall, the Western Australian co-ordinator of British Pensions in Australia, says there are about 250,000 British pensioners in Australia. Of those, about 180,000 also receive a part age pension from Centrelink, subject to means testing. But in 2001, access to the Australian age pension was tightened. Brits must live in Australia permanently for 10 years before being eligible to claim.
The British national budget is certainly under strain. Any change by the British government in its pensions policy for expatriates in Australia would likely, for fairness, apply to the more than 500,000 Britons living outside of Britain with frozen pensions. Most of those with frozen pensions live in the Commonwealth countries of Australia, Canada, New Zealand and South Africa. However, Britain does pay the full pension to British migrants living in the US and most of Europe.
Last year there was a glimmer of hope when the British government gave a commitment to at least start discussions with the Australian government. But the British Foreign Secretary, William Hague, on his visit to Australia this year, said in response to a question about pensions that the "huge" British budget deficit meant there was "no prospect of us being able to take on a major new area of expenditure".
Goodall says not indexing British pensions is "blatant discrimination". He says the cost of unfreezing the pensions around the world, not just for British expatriates in Australia, would cost less than 1 per cent of Britain's pensions budget.