The UK government is apparently making a new year’s resolution to crack down on those British pensioners overseas who are apparently claiming annual increases in the state pension to which they are not entitled.
There are 550,000 recipients of the state pension who live overseas, or about four percent of the total claimants living in the UK. The majority of those expats have their state pension frozen from the time they first take it and, moreover, they are not entitled to the winter fuel allowance.
Those penalized for the rest of their lives (unless they resume residence in UK) include those living in most Commonwealth countries as well as the majority of other states including Thailand and all Asian countries except the Philippines.. However, those British expats living in EU countries, the United States, Israel and one or two more do receive the annual increase based roughly on the UK rate of inflation.
A small minority of those living in the “frozen” countries, including Thailand and Cambodia, attempt to conceal their expat status, normally by using a friend’s or relative’s address as a post-restante in the UK. By pretending to live in the UK, they continue to receive the annual increase as well as the winter fuel allowance which averages about 200 pounds per year.
Research by Pattaya Today has revealed there are several ways in which defrauding expats can be exposed to the UK authorities. Frequent use of credit and debit cards overseas can lead to questions by the UK authorities, especially as traditional banking secrecy laws are in stark decline. Another possible source of exposure is when an application is made for a new British passport as every page of the expiring document has to be copied, sometimes revealing long-term visas which might be incompatible with UK residency.
We spoke to Stan, a Pattaya resident of many years, who was recently fined heavily by UK authorities after his mother died in UK and his use of her address as a post-restante was brought to official attention. He has also been charged with filling in his income tax return with criminal intent which could see him further penalized. “It looks like my income from UK will be cut by over a half for several years because of the accumulated fines,” he said.
No official figures are published about fraudulent claimants worldwide, but experts say it is unlikely to be more than five percent of the total. Critics of the whole system whereby some overseas pensioners are penalized, even though they have paid taxes all their working lives, say that the government should abolish the anomaly and abolish the whole notion of freezing pensions.
But Britain’s Department of Work and Pensions replies that it would be too expensive fully to index-link all overseas state pensions at a cost of 590 million pounds annually. A spokesman added that those living in countries not frozen are simply fortunate as they benefit from mutual pacts and bi-lateral agreements made many years ago.
Yet the government has given way on another contentious issue regarding the state pension. It was announced recently that British pensioners living in EU countries, after Britain formally withdraws from membership in 2019, will continue to receive index-linked pensions. The whole system is ripe for comprehensive review, yet insiders doubt there is the political will to address the global issue. Expat pensioners are simply unimportant and mostly do not (or are not allowed) to vote in UK elections.
The full state pension of just under 160 pounds a week is available to qualified pensioners who have at least 35 years of qualifying national insurance payments. It is said to be one of the lowest rates in the whole of the EU.