Published on September 4th, 2009 | by john.weir4
Pension parity issues in Australia â€“ a mountain out of a molehill ?
The ongoing saga of British expats reaching the end of the road with their quest to have UK Age Pensions indexed in line with their UK resident counterparts is now with The European Court of Human Rights. The Court is currently hearing the case which affects over half a million British expats living in countries like Australia, New Zealand, Canada and South Africa. Their decision is expected by April 2010.
A group of 13 pensioners who have moved abroad want their UK state pensions to rise in line with inflation each year. Inflation-proofing only applies to UK pensioners who live in the European Economic Area or in 15 other countries.
The expat pensioners say they have been unfairly discriminated against, arguing that they should have the same rights as UK residentpensioners.
The British Australian Pensioner Association (BAPA) are campaigning for parity for their members, with chairman Tony Bockman saying â€œThe livelihoods of more than half a million elderly are directly affected. unable to join their children and grandchildren overseas due to the threat of a loss of income should they do so, thus denying them those wonderful experiences of sharing their later years with family, surely a right that none of us expected to have taken away from us.â€
Geraint Davies Managing Director of Montfort International, sees their claim as being in many cases over egged and has never seen anybody not moving to Australia due to the UK pension not being indexed.Â Careful pre-departure financial planning has resulted in many migrants gaining far more than they would have lost.Â I think those affected appear to be those not maximizing options.
BAPA claim that â€œhundredsâ€ of their members living in Australia have contacted them about the pension situation.
However, Geraint Davies, who launched the very first international pension transfer service from the UK in 1995, says that the issue may have unwanted consequences. Some would no doubt lose their Commonwealth Senior Health Card and others their Pension Concession Card.Â This is very much a case by case basis and some joining the campaign may find themselves worse off if the case is won.
For example a Pensioner Concession Card entitles you to reduced cost medicines under the Pharmaceutical Benefits Scheme as well as entitlements in the form of various concessions from the Australian Governmentâ€”these could include, bulk billing for doctorâ€™s appointments (this is your doctorâ€™s decision), more refunds for medical expenses through the Medicare Safety Net, assistance with hearing services, discounted mail redirection through Australia Post, etc.
However it is on the State level where the real losses could be incurred for those losing concessions offered from State and Territory Governments and local councilsâ€”these could include:
Â· reductions on property and water rates
Â· reductions on energy bills
Â· a telephone allowance
Â· reduced fares on public transport
Â· reductions on motor vehicle registration
Â· free rail journeys.
Davies says he sees this as being potentially counterproductive and being very much a â€œa mountain being made out of a molehillâ€. The focus, he argues, should be on the financial planning issues rather than the loss of age pensions, as the average pensioner could find that even if the increase were Â£5 a week, that its costs them in lost benefits more than the Â£5 gained.Â He explains â€œIf Australiaâ€™s means test removes 40% of the Â£5 â€“ surely the remaining Â£3 could be lost in not being able to take advantage in just the savings created by reduced energy billsâ€.
â€œCertainly those on the old 410 Retirement Visa, those who havenâ€™t lived in Australia as permanent residents for 10 years and those who already donâ€™t qualify for the Commonwealth Senior Health Card have reason to want the case to be won, but others may find they would be worse offâ€.