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The Truth About Frozen Pension


More than half a million UK pensioners residing abroad will continue to have their frozen pension after a European court decision. Some British retirees undergo with this process where their pension plan will not earn additional benefit credits preventing it from continuing to grow during the frozen period. The UK policy means that even they have paid their contributions in good faith during their working days their British pension have not been raised in line with inflation since they move abroad. But, if they live in the UK or in certain other countries that has a reciprocal arrangement with the UK government, the annuity normally increases each year.

In UK, all British citizens are obliged to pay their national insurance fund to have a better retirement. Sometimes, they may not be able to pay national insurance if they are sick or out of work. In many cases, the government will make a way in order to pay their contribution by giving them National Insurance credits. They may acquire this by getting Child Benefit or caring for someone who is disabled or ill. Moreover, the pensioners really value their National Insurance knowing that they can avail a pension during their retirement age. There are overseas retirees who choose to transfer their pension to a new scheme because they wanted to get the most out of their pension payments and they cannot afford to see the value of their pension income decrease any further through currency fluctuation.

Furthermore, a pensioner's country of residence is also a deciding factor. Strangely, it is those living in British Commonwealth countries that got the hardest hit and the largest group with frozen pension. The current pension system denies yearly pension "up-ratings", which aim to oppose the effect of inflation that consumed the value of pension income. The arrangement is supposedly based on long-standing reciprocal agreements.

For many years now retired British expats have been fighting against the UK government policy of freezing certain pensions depending on the country the pensioners choose to lives in. The case was taken to the European Court of Human Rights, arguing that the current system violate human rights. They assert that the freeze was discriminatory, spoils retiree's right to full family life and hold back liberty of transfer. Essentially, the UK Government's argument now is that it can't afford to up-rate all overseas pensions. Therefore, frozen pension is still a concern for UK expatriates and their hope to have a just pension is still at stake.


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