State pensioners risk having payments 'frozen' depending on location

A state pension warning has been issued as pensioners face a nasty shock with payments FROZEN. State pensioners have been told to beware a "nasty shock" because there are several popular retirement destinations where the state pension does not get increased every year.

Worryingly for UK expats, it includes Australia, New Zealand and Canada. The most recent figures show there were just over 450,000 people living overseas who were not getting state pension increases from the Department for Work and Pensions (DWP) in March 2023.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown: “Frozen state pensions affect pensioners living in certain countries where there is no reciprocal agreement to boost state pensions annually. This means their pensions remain at the same level as they were when they left the UK.

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“Over time this means pensioners living in these countries will be on substantially less than those living in the UK so it is vital that you check whether you will be affected if you are considering retiring abroad as you could find yourself struggling financially over time.”

Ms Morrissey added: “Different countries have different rules and regulations and it’s really important that you understand how these are going to affect you before you make the decision to retire abroad. For instance, tax rules can differ, and you could find yourself massively out of pocket if you fall foul of them.

“State pension is no different - it’s vital you check with the International Pension Centre about the rules before you go to save yourself a nasty shock. The government has been challenged on whether it could reverse the policy, but it has refused to do so on the basis of cost.”

A DWP spokesperson said: “Our priority is ensuring every pensioner receives the financial support to which they are entitled. We understand that people move abroad for many reasons and we provide clear information on GOV.UK about how this can impact 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.”