While outlanders on the continent relished a boost; however, those in Canada and Australia have witnessed the purchasing power of their state pension dropped substantially
In the Eurozone, 445,000 retired Britons saw their state pension income grow 10pc in the last year owing to the strength of sterling and the yearly appreciation in the payments, according to a research.
A study conducted by Prudential found that the basic state pension is now at € 7,344.44, an up surge of €661.24 against the amount payable last year. Three-quarters of this growth is because of the pound’s higher strength against Euro, which hit €1.25 last month against €1.17 a year ago; with the remainder down to the growth in the payments in the month of April that increased it from €110.15 to €113.10
For over 5 year, the growth is even more apparent. Eurozone outlander pensioners presently avail 26pc more in Euros via their basic state pension opposed to what they received 5-years ago – the equivalent of salary rise of €1,530 a year.
However, not all get retired people get inflation-linked pension growths. The people who moved to Commonwealth nations find that their state pension payments were frozen at the stage when they emigrate.
To amalgam the pain, some of the commonwealth nations those are most famous with British outlanders have seen the highest hikes against the pound, thereby decreasing the purchasing power of their respective state pension pounds.
Unfortunately, the State Pension Values Dropped in Canada and Australia
The Prudential’s research did not cover this side of the coin, but as per our calculations the annual pension of €4,953 in the year 2009 would have been worth 10,153 Australian dollars. However, today, it is around $9,014 because of 11pc downslide in the value of pound as compared to the Australian dollars.
Moving on….in Canada, around 5-years ago, the UK state pension exchanged for approx. C$9,658; however, presently, still frozen, it could purchase only C$9,163 due to 5pc fall. However, this is a great improvement from $7,578, which UK state pension was purchasing at the pound’s low as compared to Canadian dollar last year.
Outlanders in South Africa have frozen pensions as well, but it has undergone big-time improvement from the weakness of rand, with their fixed pension purchasing 90,639 rand presently against 64,884 rand almost 5 years ago.
None of these figures mentioned above show up in inflation, which was as high as 3.5pc in Australia and 3.4 pc in Canada, and would have depreciated further at the purchasing power of the frozen pension funds.
It is extremely annoying especially for the frozen out pensioners because the UK state pension at home and outlanders in the non-Commonwealth nations has highly benefited from the “triple lock guarantee,’ which every year warrants that the payment growth by whichever is the highest: wages, 2.5pc or inflation.
Frozen pensions have been around since 1950s and in the current times it affects more than half million outlanders. Successive governments have referred frozen pensions as “historic anomaly”; however, no one have attempted to rectify it because of the £500m cost involved.
“It is great to see that Eurozone based pensioners are getting appreciated incomes and the figures reveal great revenues during the last few years. Nevertheless, what the data overlooks is that the 550,000 Briton pensioners residing overseas in nations like Canada, New Zealand, South Africa and Australia, all of whom has their pensions at the given rate when they left UK, have got no hike since.
While the pensions of Britons in the Eurozone turned better, the pensions got frozen of their counterparts residing in 120 nations and are forced to manage with the decreasing income”, told Sheila Telford, chairman of International Consortium of British, which is campaigning for change.
All we need to ask here is ‘How this unfair and harsh pension policy allowed to be borne?