State Pension warning as 500,000 older Brits will never see a penny of | Personal Finance | Finance #UKFinance

More than 500,000 older Brits living abroad will miss out on the much-anticipated triple lock boost to the UK state pension, sparking concerns for their financial well-being in retirement.

While millions of UK pensioners will benefit from the government’s commitment to the triple lock in 2024, a significant number of expats will never see a penny of the increase due to a longstanding policy on pension uprating.

The triple lock mechanism, which guarantees that state pensions increase each year by whichever is highest among inflation, average earnings growth, or 2.5%, has been a crucial safeguard for UK retirees since its introduction in 2010.

This year’s rise is expected to be substantial, with average wage growth driving up the state pension by around 8.5% from April 2024.

However, the policy does not apply to pensioners living in certain countries, leaving those affected without any pension increase, no matter how much the triple lock raises the state pension in the UK.

According to official figures, over 500,000 British pensioners residing in countries like Australia, Canada, New Zealand, and parts of the Caribbean will see their pensions effectively frozen at the level they first received them, with no inflation-linked increase.

The UK’s controversial frozen pensions policy applies to pensioners living in countries where there is no reciprocal agreement with the UK.

This includes popular expat destinations like Australia and Canada, where thousands of British retirees live, but where their state pension remains fixed at the rate when they left the UK or started claiming their pension abroad.

Over time, this means their pension loses significant value due to inflation.

Chris Lee, a 68-year-old British expat in Thailand, is one of those feeling the harsh effects of the frozen pensions policy.

After moving to Thailand 14 years ago to enjoy his retirement in the sun, Lee’s state pension was frozen when he turned 66 in 2021.

While UK pensioners will receive £221.20 per week by next April, Lee’s pension remains stuck at £131 per week.

“I’m absolutely gutted,” Lee, told the Telegraph.

“The recent rises have been phenomenal. It’s money we’re entitled to. I paid 37 years of National Insurance contributions.”

Had his pension been uprated, Lee’s weekly payments would rise to £167 next year, meaning he will lose out on £1,872 annually.

“The value of our pensions diminishes year by year as prices increase,” he added.

“It’s totally immoral and wrong. If we all came back to the UK, imagine the burden on healthcare and benefits.”

Groups such as the International Consortium of British Pensioners (ICBP) argue that pensioners who have contributed to the UK system throughout their working lives should not be penalized simply because they choose to retire abroad.

Many expats affected by the policy say they are struggling to make ends meet as the cost of living rises in their adopted countries.

With no uprating to their pension, their purchasing power has dwindled, leaving some retirees in poverty.

The recent confirmation of another significant increase through the triple lock has renewed pressure on the government to review its stance.

John Duffy, chair of the ICBP, said: “It is completely unjust that pensioners who worked and contributed in the UK for decades are denied the full pension they are entitled to, simply because they live in the wrong country.

“This policy is pushing people into financial hardship.”

The UK government has consistently defended its stance on frozen pensions, stating that changing the policy would result in significant costs to the taxpayer.

Estimates suggest that fully uprating pensions for all expats could cost the UK Treasury billions of pounds over the coming years.

In a recent statement, a government spokesperson said: “The UK has no legal obligation to uprate pensions overseas, except where there is a reciprocal agreement in place.

“Decisions on where people choose to retire are a personal matter, and those living abroad should be aware of the implications for their state pension.”

While frozen pensioners abroad will see no change, millions of state pensioners living in the UK or in countries with reciprocal agreements will receive a substantial boost from the triple lock.

In April 2024, the full new state pension is set to increase from £203.85 per week to around £221, providing an annual uplift of over £900.

For those on the basic state pension, which is typically paid to those who retired before April 2016, the weekly amount is expected to rise from £156.20 to approximately £169.48.

This uplift will make a meaningful difference to many pensioners, especially as inflation continues to affect household budgets.