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Published on September 4th, 2009 | by


Pension parity issues in Australia – 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 “The 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.”

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.  Careful pre-departure financial planning has resulted in many migrants gaining far more than they would have lost.  I think those affected appear to be those not maximizing options.

BAPA claim that “hundreds” 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.  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 Government—these could include, bulk billing for doctor’s appointments (this is your doctor’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 councils—these could include:

· reductions on property and water rates

· reductions on energy bills

· a telephone allowance

· reduced fares on public transport

· reductions on motor vehicle registration

· free rail journeys.

Davies says he sees this as being potentially counterproductive and being very much a “a mountain being made out of a molehill”. 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 £5 a week, that its costs them in lost benefits more than the £5 gained.  He explains “If Australia’s means test removes 40% of the £5 – surely the remaining £3 could be lost in not being able to take advantage in just the savings created by reduced energy bills”.

“Certainly those on the old 410 Retirement Visa, those who haven’t lived in Australia as permanent residents for 10 years and those who already don’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 off”.

4 Responses to Pension parity issues in Australia – a mountain out of a molehill ?

  1. Jeffrey says:

    Hello There,
    I really love your new site on Australia & New Zealand Magazine

  2. Tony Bockman says:

    That would have to be the first time I have ever heard of anyone being worse off by receiving more money in their pension. I wonder if the corollary is true – pensioners should ask for less money in order to be better off!

    This issue is one of discrimination. Half a million pensioners living in certain overseas countries, including the USA, the EU, Israel, Switzerland, Bermuda, Barbados, Jamaica, Turkey, The Philippines and several others, all receive uprated pensions each year.

    Another half a million pensioners living in mainly Commonwealth countries including Australia, Canada and New Zealand have their pensions frozen at the rate at which they are first paid, or the date of migration. All having paid their National Insurance contributions under the same rules.

    Perhaps Mr Davies should have asked poor Mr Hays living in Sydney and receiving a full weekly British pension of £6.75 per week, when his cousin of the same age in the USA was receiving nearly £80.00 per week, both having contributed the same to the National Insurance Fund, whether he would think he would be worse off if his pension increased from £6.75 to £80.00 per week?

    In many cases it would be better to have 60% of something than 100% of nothing.

  3. sara says:

    People who do not have uprated pensions and have been overseas where there is no uprating are suffering so much, not just in the countries you mention but in Zimbabwe etc. Surely you have read yourselves the plight of old people there? Please do NOT talk when you dont have the facts. We are the ones suffering – not you. Dont make excuses to make yourselves feel better – you who do not know. And dont even try to ‘frighten’ those poor, very old people who really do NOT have enough money, that they will lose the concessions they have at present! How cruel can you get? It would be nice for you if YOU were the sufferer and then you would know what WE are complaining about. The uprating of pensions is WELL OVER DUE. British money is being wasted now because officers will not check foreign bogus benefit- takers who lie and get extraordinary amounts out of the UK Govt. That money could help us instead! We WORKED for years not to so that the UK Govt. can hand over our hard earned money!

  4. Geraint L Davies says:

    Migration Finance Expert Advises Caution
    Many migrants waiting for news about whether their UK state pensions will be indexed could find themselves worse off by pinning their confidence on a win in the European Court of Human Rights (ECHR) with their challenge against the way the UK state pensions legislation penalises those who retire to Australia.

    British state pensions remain payable to those who move to another country after retirement, but it is frozen at the rate it was when they leave Britain unless their destination country has an agreement with the UK. Unfortunately UK and Australia once had an agreement, signed up to by Australia which was subsequently cancelled – for some reason Australia agreed to no indexation of benefits from the UK.

    “Should the case be won much of the win for Australian pensioners will be devoured either by taxation or by 40% of each £ won being deducted from their Australian Age pension – and its likely to be retrospective.” says Geraint Davies, Managing Director of migration finance specialists Montfort International. “However, many migrants can make up their benefits by efficient tax and financial planning pre-departure utilizing the interaction benefits created by a Qualifying Recognised Overseas Pension Scheme (QROPS).”

    If moving to Australia, specific care should be taken by anyone who has entitlements to a UK age pension

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