My Lords, we have no plans to make any changes to the current arrangements that allow for the exportability and uprating of UK state pensions. The UK state pension is payable worldwide but is uprated outside the UK only when there is a legal requirement or reciprocal agreement to do so.
My Lords, is the Minister aware that there are some 500,000 UK pensioners in the USA and the European Union whose pensions are uprated, and a further 500,000 in the rest of the world, notably in Commonwealth countries such as Australia, New Zealand and Canada, where their pensions are not uprated? Many people in those latter countries now receive only £10 a week. Given that we are the only country in the OECD that discriminates in that way, does the Minister think that this situation is just?
My Lords, the figures for non-frozen pensioners are 610,000 and for frozen pensioners 550,000. The difference in payment is currently between £57 for the non-frozen and £32.70 for the frozen. I am satisfied, as are the courts, that what we have is objective and justifiable in this area.
My Lords, I have had a letter from a friend of mine who lives in Spain and has lived there for 20 years, and who is in his eighties. The letter from the Department for Work and Pensions says: “I am writing to tell you that we cannot pay a UK state pension at the moment. This is because we cannot be sure that the amount of money that we pay you is correct. Payment of state pension has been stopped from 24 January”. There is no right of appeal against this decision. Is this how we are going to treat our pensioners?
I have asked about Commonwealth pensions both in writing and verbally over many years because, as noble Lords will appreciate, I get lots of letters. No Government have at any time ever considered it feasible to try to upgrade the pension, because so many people are involved. However, it is important to appreciate that in some countries it is different. In Australia, the national Government see that pensioners have the means to survive.
My Lords, this is a much more complicated issue than it seems on the surface, because it is not a question of making a payment to a pensioner the entirety of which they then put into their pocket. The country where they are living will often supplement their pension, so it can often be a case, for instance, of us making a higher pension payment and the equivalent of pension credit being reduced. It is money out of the UK taxpayer’s pocket into the pocket of the taxpayers of another country. It is a far more complicated issue than it seems on the surface.
My Lords, I agree with the Minister that now is not the time to change the uprating of pensions paid abroad. The priority should be to push back against the aggressive acceleration of the state pension age for women. However, does he agree that British pensioners overseas have the benefit of the reduced number of years of contributions to receive a full basic state pension, which came in under our legislation in April 2010, and still have the ability to top up entitlements by class 3 buy-backs on a basis whereby for £655 you can buy extra pension of about £170 a year for life? That seems a pretty generous deal.
My Lords, I am happy to congratulate the noble Lord opposite on those changes, which I know that he was involved with. I think they have been valuable. The point about costs in the current environment is that this change to uprating in the frozen areas would cost us £620 million a year, and in the context of the austerity position that we are in—all noble Lords will be very familiar with the terrible dilemmas that we face as we look to get the budget under control—we should consider how much that £620 million represents.
My Lords, would my noble friend accept that what matters when paying British pensions to pensioners in places such as Canada is reciprocity? In other words, if the Britons in Canada are paid the Canadian pension and the Canadian pensioners in this country are paid British pensions, that would be regarded as a fair deal. What discussions on reciprocity are going on at the moment between his department and overseas Governments?
My Lords, there are currently no discussions on reciprocity. That is not a strategy that we have. The reciprocity agreements are, if you like, a little like a double tax treaty network of agreements. We are not going into that at the moment. There are 30 countries with which we have reciprocal agreements, and currently we are not planning to expand that. However, this is a policy that we keep under review.