UK State Pensions - another loophole

[margaretcarnes]

Following my article on a problem with womens pensions (Mags Page, HH Observer, February issue) an expat has kindly contacted me with another State Pensions issue. I will try to summarise as briefly as possible.
This concerns the 'freezing' of UK State Pensions for Brits who have notified the Pensions Dept that they are living in Thailand. This was discussed here last month, but it seems there is a loophole which I wasn't aware of.
There are 2 different sources of state pension. The Guaranteed Minimum Pension (GMP) which is based on National Insurance contributions paid from 6.4.78 onwards. In addition there can be the 'contracted out' element of the state pension, paid when people have been in their employers pension scheme and were therefore - as I recall - granted part exemption from the state scheme.
If I am interpreting the info correctly, it would appear that the employers liability to pay the occupational pension in lieu of the state pension element which was contracted out cannot be frozen.
The chap who gave me the info has succesfully gained an increase to his pension by taking the matter up with his ex employer, and suggests that people affected in this way write as follows, to the employers Pension Department:
'Because I now live permanently in Thailand, my State Pension has been frozen at the rate of £xxx per week since 6th April xxx.
As I no longer receive the annual increase on the GMP element from the State am I entitled to receive this additional amount from you with the payments of my Occupational Pension'.

I'm sure there will be queries on this, and will put the whole thing in my Observer page in April.

[Governor]

This is a bombshell and will have a major impact on pension providers and expats if it if pension providers accept the loophole.

Like you I am a Civil Service pensioner, but not yet receiving my State Pension, so will watch for development with interest.

If this is a loophole I presume they will try to close it, I wonder if they will be able to do it retrospectively, and then will they try to close it for those already receiving their state pension, those receiving their occupational pension but not their state pension, or new joiners to the occupational schemes.

I will watch developments with interest, and just hope that I don’t forget about it when I reach state pension age.

[niggle]

I am sure dear mr brown will find yet another way to stop us getting what we paid al those years.
At the same time maybe he could give english people the same benefit and allowances rights as the scottish and welsh (university education, free prescriptions, free nursing care etc) - whoops I just saw another flying pig

[margaretcarnes]

Yes Niggle I'm dodging those pigs as well! But in response to Governor, I've never known anything like this to be reclaimed retrospectively. It seems likely that its something to do with the terms of occupational pensions and, as we know, expats continue to have entitlement to annual increases on those regardless of where they live. An occupational pension does require contributions from the individual, as well as the 'contracted out' element. So it would be a hell of a job to determine individual elements anyway.
Whether terms and conditions of such pensions might be changed in the future is another matter.....

[bozzman101]

anyone know what the story is with irish state pensions as far as i can see the buggers dont want to pay anything if your outside the state???????????????????

[niggle]

An option is of course not to tell UK pensions that you are living abroad. As long as you have a mailing address and they write to you there no-one is any the wiser. Anyway, maybe you are just on a holiday which can last as long as you want it to

[margaretcarnes]

Hi Bozzman - good point, I'll try to get some info on Irish pension rules. Their system was always slightly different (and some things like their old UB actually paid more than England.)

Niggle has raised the old chestnut again though. To tell or not to tell. I think the point about finding this 'anomally' (although it will only apply to people who were contracted out) is that it could help to solve the problem. i.e. if you know you will still get some annual increase theres no need to risk the fiddle!
You never know, contrary to the fear of the loophole being blocked, it could be used as a valid arguement for opening up the right to the increases regardless of where you live? Don't forget the daft rule jusn't just apply in LOS.

[Thai Tam]

Niggles,

Suggest you you educate yourself on some of the issues you raise about the Scots, Welsh etc.

The specific policy differences you highlight arise from the decisions made by the relevant Government/Assembly.

[niggle]

Oh dear.
Of course I know the scottish and welsh MP voted these things for themselves independantly (a right which English MPs do not have) for scotland and wales only. Any change to policies within the UK with financial implications have to be agreed by the treasury (aka Gordon Brown).
Try not to miss the point here. This post is talking about inequalities

[Thai Tam]

Niggles,

Sorry, but MPs did not vote for the policy changes, these were voted for by the Scottish Government and the Welsh Assembly, i.e.devolved decision making.

The inequalities arise because the UK Parliament has not voted for such changes and it is down to English MPs to press for such changes.

The point I was making was that some of what you state is factually incorrect, e.g. nursing care in Scotland is not free and this is the case in England too - only social care is provided free, whilst of course prescriptions are free based on certain criteria in all three countries.

Still wish HM Treasury had pressed for the UK non-domiciles to pay UK incoome tax, just like the rest of us!

[niggle]

Posted: Sun Mar 02, 2008 7:30 am Post subject:

--------------------------------------------------------------------------------
I agree your point about the devolved decision making but decisions made by the relevant assemblies are ratified by the UK government - that is the point I was making - mainly due to financial implications.
I am also aware that it is unlikely to be approved for England due to the financial implictons due to population size. I also believe this will be resurrected (the west lothian question) soon before the next general election..

You are correct that the nursing care element of ongoing care is free in all countries in the UK. However the nursing care element is rarely assessed as being above 25 percent of the cost of nursing home fees.

Anyway lets leave it as that as I still rant about the effect of such an assessment on patients and carers of people who are suffering from a form of dementia which is still regarded as a social illness to a greater extent than a physical illness.

But do I think the governemt will address the issue of UK non-domiciles and pension increases - no I dont
The reason - money of course

[Governor]

Niggles,

Still wish HM Treasury had pressed for the UK non-domiciles to pay UK incoome tax, just like the rest of us!

I for one pay UK income tax, though I am not domiciled there, but I will not benefit from increases in State Pension, unless I can take advantage of this loophole,

[niggle]

Same here !

[Thai Tam]

Niggles and Margaret, the UK non-domiciles to whom I am referring are those people who reside in the UK (e.g. Russian billionaires) who are exempt from UK income tax owing to their tax status, but who enjoy the freedoms and benefits of living in the UK. This is the issue on which the government appears to have backed down.

Hope you resolve you pension issues - I'm next!

[Onlyme]

You lot really make me laugh.
Talking about frozen pensions etc...........
I've lately given, pesioners advice, whereupon, they can get up to 60% increase on their total pension.
I did this recently for two old "farts" who have since received a "rake of money" from the UK pension fund.
Anyone over 65 wishing to know how this works....Feel free to PM me.
Onlyme.
PS. I want a few quid up front!