State pension: ‘Cheated’ pensioner loses thousands due to where he lives | Personal Finance | Finance
The man, who is 75-years-old, was the managing director of a British company for 25 years, but now lives in China. He spoke exclusively to Express.co.uk about why he is calling for all pensioners to receive the same amount of state pension no matter where they live.
Every year UK pensioners receive an uprating to their state pension so their payments keep up with inflation.
However, around half a million (500,000) pensioners miss out on the annual uprating of the state pension because they have moved overseas.
British pensioners who have moved to countries like China, Thailand and Canada are paid less just because of where they live.
The state pension only increases in locations like the UK, Gibraltar, Switzerland, the European Economic Area and countries with a reciprocal agreement.
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Unfortunately, he isn’t the only one unhappy with the current system – another pensioner told Express.co.uk he only receives £128 a week and spends much of this on essential medication.
The man, who is 69-years-old, worked in the UK Civil Service for over 42 years but now lives in Thailand.
He told Express.co.uk: “Since I am living in Thailand I have received no increase since the original award. I pay UK income tax on all my income, that being my private pension plus state pension.
“So I pay some £2,400 – and if you add the pension shortfall as effectively a tax cost to me and a saving to the UK – then my effective tax rate on a modest income is horrendous.”
He continued: “I have no choice of where to pay tax and neither would I wish to.
“It seems grossly unfair that we receive less simply because of where we live. It seems particularly unfair if, like me, you pay UK income tax on all your income.
“It’s a pay-as-you-go system so it is argued that UK taxpayers should not subsidise those who live in non-conventional countries.
“How does that sit with many like me paying rising tax into this pay-as-you-go system yet getting no increase? It’s tantamount to legalised theft!”
The End Frozen Pensions Campaign has been calling for an end to the “arbitrary postcode lottery” which sees some expats benefit from increases to their state pension, while others miss out.
However, a Department for Work and Pensions said people can check GOV.UK to see how their state pension will be affected before moving abroad.
They said: “We understand that people move abroad for many reasons and that this can impact on their finances.
“The Government’s policy on the uprating of the UK state pension for recipients living overseas is a longstanding one of more than 70 years and we continue to uprate state pensions overseas where there is a legal requirement to do so.”
Do you have a personal finance story or frozen pension story to share? Express.co.uk would like to hear from you. People can get in touch via [email protected].
