Pension Purchasing Power less certain in a Global Village
British citizens retired overseas lost their High Court battle this week, for the right to have their UK state retirement pensions updated in line with inflation. This brings into question the whole issue of security of pension rights when earned in a country different to where people might decide to live in retirement. Whilst pension based systems have always been thought to be more logical for government retirement benefits, this may focus on rights to cash lump sums for people who move countries near or after retirement.
Of 900,000 UK pensioners living abroad, about 420,000 living in Europe and the USA receive inflation adjustment while 480,000 living in South Africa, Australia, Canada and New Zealand have frozen pensions. This latest High Court test case was brought by Annette Carson, 61, who challenged a refusal by the Department for Work and Pensions to index her pension and make annual increases because she lives in South Africa.
Australia has agreements on social security with eleven countries New Zealand, Italy, Canada, Spain, Malta, the Netherlands, Ireland, Portugal, Austria, Cyprus and Denmark. A key element in these social security agreements is the sharing of responsibility between the partners in providing adequate social security coverage for former residents of their country. Some imbalance has occurred in the New Zealand agrements in the past because of one way drift of NZ retirees and unemployed to Australia.
Posted Saturday, 25 May 2002
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