Critics are warning that hundreds of thousands of people in a special category will miss out on state pension rises, with around 453,000 state pensioners affected in what some are calling an ‘injustice’. These individuals are UK citizens whose decision to relocate is costing them financially.
It’s crucial to understand the upcoming pension increases. The annual State Pension rise in April is likely to be determined by the earnings growth measure of the Triple Lock, according to recent figures from the Office for National Statistics (ONS).
That lock guarantees that the New and Basic State Pensions increase each year in line with either the average annual earnings growth from May to July, the Consumer Prices Index (CPI) in the year to September, or 2.5 per cent. Thus the term triple lock.
August’s CPI was recorded at 2.2 per cent, while the average earnings growth for the 12 months to July dropped from 4.5 per cent to 4 per cent – making it the current leading measure of the Triple Lock. Although the new State Pension rates won’t be confirmed until the Autumn Budget, this provides little comfort to nearly half a million pensioners who will not receive any increase at all.
Those on the full New State Pension could see their weekly payment increase by £8.85, from £221.20 to £230.05, according to the latest earnings growth figures. This means an uplift of £920.20 for every four-week period.
This would lead to annual payments rising by £460, from £11,502 to £11,962, throughout the 2025/25 financial year. However, this won’t apply to everyone.
In a similar vein, individuals receiving the full Basic State Pension might experience a weekly rise of £6.80, from £169.50 to £176.30, as reported by the Daily Record. This equates to an additional £705.20 every four weeks.
While many State Pension recipients can look forward to this increase next year, not all will benefit. The International Consortium of British Pensioners (ICBP) highlights that around 453,000 expatriate pensioners with ‘frozen pensions’ will miss out.
The ICBP’s ‘End Frozen Pensions’ campaign is gathering momentum in its fight to “end the injustice” faced by UK nationals who have moved to countries such as Canada, Australia, and New Zealand. In these locations, without reciprocal agreements with the UK, pensions do not increase and remain at the rate they were when the pensioner emigrated, despite any National Insurance contributions they made while working in the UK.
To be eligible for the State Pension, individuals must have at least 10 years of National Insurance contributions, with approximately 35 years needed for the full amount – those who were ‘contracted out’ may require more. The Canadian Alliance of British Pensioners has provided estimates suggesting that the new Labour Government could align all frozen State Pensions with current rates at an additional cost of £50 million.
Graham Dodd, a board member of the Canadian Alliance of British Pensioners, told the Daily Record: “The Government’s line is that they only uprate where there is a legal requirement to do so. The folly in this is that it is in their hands to pass the necessary legislation.
“It is true that should the UK make all the existing and future frozen pensioners whole by bringing them to the level they would have been if they had never been frozen then the cost would be £0.94 billion. However, in all previous cases of unfreezing, the UK has never made all the existing and future frozen pensioners whole by bringing them to the level they would have been if they had never been frozen.”
Dodd explained that when State Pensions for expats in the USA were unfrozen, it was the current rate of annual increase that was applied to their previously frozen pensions. He highlighted that the often quoted figure of £0.94 billion needed to rectify the situation equates to just 0.7 per cent of the total State Pension expenditure forecasted for 2023/24.
Furthermore, Dodd detailed that the exact sum required to address the issue for the 113,000 British retirees living in Canada is £26 million. That’s 0.019% of the over £120 billion total State Pension expense projected for 2024, or £11 million if resolved in 2025.
For all 453,000 affected pensioners, the amount needed to adjust pensions for the financial year 2024/25 is £49 million. For the subsequent years, the figures are £34 million for 2025/26 and £35 million for 2026/27, each representing approximately 0.02 per cent of the overall State Pension expenditure.
These figures are derived from the UK Government’s previous forecast for the average earnings growth measure for the Triple Lock at 3.6 per cent.
Chancellor Rachel Reeves is set to announce the annual State Pension uprating during the Autumn Budget on October 30.