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Pensions: Overseas Residence

Volume 458: debated on Wednesday 14 March 2007

To ask the Secretary of State for Work and Pensions what the policy reasons are for the different rules which apply to providing index-linked pensions to British pensioners living in Canada and the United States. (126543)

The UK has a full reciprocal social security agreement with the United States covering a range of contributory social security benefits for people moving between the countries, including provision allowing annual UK state pension uprating increases to be paid.

The arrangement with Canada is very limited in scope and does not allow annual UK state pension uprating increases. The arrangement, which was first entered into in 1959, helps only persons coming to the UK from Canada. For retirement pension purposes, it allows former residents of Canada to qualify for an enhanced amount of UK basic state pension by treating periods of residence in Canada as periods when UK national insurance contributions had been paid, provided the person has resided in the UK for 10 years following arrival or return here. There is no corresponding arrangement that would help a person going from the UK to Canada to qualify for either UK or Canadian benefits on taking up residence there.

An agreement between the UK and the USA, which was concluded in 1969, allowed future annual uprating increases that became payable after its coming into force to be paid to UK pensioners living in the USA. Talks were subsequently held with Canada about a possible similar agreement. However, Canadian legislation prevented payment of Canadian old age security pension (COASP) under reciprocal agreements with other countries, ruling out the scope for reciprocity in the export of pensions. Although this legislation was amended in 1977 to allow COASP to be paid outside Canada, UK Ministers at that time decided, in line with the UK’s general policy on frozen pensions, that insufficient resources were available for increasing the rates of UK pension payable in Canada. The arrangement between the UK and Canada was updated at the time, to reflect the developments in Canadian legislation, but the changes to it were limited to ensuring that there was no double concurrent provision of both countries’ pensions for former Canadian residents living in the UK.