One British expat living in Canada, who has had his UK state pension frozen for almost a decade said he feels “wronged” and is the victim of a “discriminatory and totally unfair” policy.
When John Duguid, 74, retired at the age of 65 his UK state pension was frozen at £82 per week in April 2015. He calculates he has lost £7,100 in those 9 years.
“I suffer from the same effects of inflation as everyone in the UK – because prices are going up higher than my savings and pensions,” Mr Duguid, who worked as a banker in both the UK and Canada before he retired, told i.
“It’s frustrating as I live next to Niagra Falls, I can see people walking just a couple of hundred yards away who will be receiving their full state pension in the US.
“I feel wronged by this policy, it’s discriminatory and totally unfair. I am now reliant on my investments but if these crashed, I would certainly be hurting.”
Mr Duguid is one of the estimated 100,000 British expats in Canada receiving what is known as a frozen pension – where recipients’ state pension payments remain fixed, gradually becoming less and less valuable.
This is compared to state pensioners living in the UK who see their state pension increased each year by the triple lock policy which means it will go up in line with inflation, average wage growth or 2.5 per cent (whichever is highest).
Mr Duguid, who worked as a banker before retiring, acknowledges that he’s very “fortunate” but remains critical of the policy.
The new full state pension is set to increase by £460 a year from April 2025. The rise is pegged to wages, which have gone up by 4 per cent.
However, the increase does not happen for those living overseas unless they are living in a country which has a reciprocal agreement with the UK.
It means British pensioners living in countries including Canada, Australia and Thailand receive far smaller pensions than those living back in the UK.
“I would find it very difficult to go back to the UK – I don’t think my quality of life would improve there despite my pension unfreezing – and my Canadian pension is indexed irrespective of wherever I live in the world.”
Mr Duguid, chair of the International Consortium of British Pensioners (ICBP) said the frozen state pension is a “serious shock” for many ex-pat pensioners but he is in a “different position.”
The 74-year-old put money aside for his retirement and worked in Canada so also benefits from a Canadian pension plan, as does his Canadian wife.
“There are people who have had their pensions frozen who are comfortably off, but it is about the principle,” Mr Duguid continued
“I enjoy living in Canada it’s a beautiful country – the scenery is beautiful and it is a wonderful place to live. “
The ICBP claimed the Department for Work and Pensions is “misleading” in estimating the cost of ending the frozen pensions policy at £4.59 billion over five years.
The ICBP claimed this assumes that all pensioners who currently receive a frozen state pension will start receiving a pension as if it had never been frozen, and says the real cost of ending the frozen pensions policy would be £307 million over five years.
The personal allowance – the income level at which people start to pay tax – has been frozen at £12,570 since 2021.
This allowance is due to start rising with inflation again each year from 2028, but Reeves is expected to announce in the Budget on 30 October that this deadline will be pushed back again by one or two years.
If the freeze was extended by two years, then in the 2029/30 tax year, retirees getting the full state pension but receiving no other private income would face a tax bill of £130 at a minimum, according to calculations by Quilter for i.
