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  • FIRST POST
    • JohnWinder
    • By JohnWinder 20th Sep 19, 6:02 AM
    • 23Posts
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    JohnWinder
    State pension deferral indexation increases outside UK/EU
    • #1
    • 20th Sep 19, 6:02 AM
    State pension deferral indexation increases outside UK/EU 20th Sep 19 at 6:02 AM
    There is a 'consumer price' (or similar) indexation of the state pension each year in April.
    This does no apply to those receiving the pension in some overseas countries.
    For those who defer taking the pension, and living in these particular overseas countries, is the pension they will receive increased with this indexation each year while they defer? Ideally, a reference to where this information is clearly stated would be helpful.
    I'm not asking about after the pension is taken. Nor am I asking about the other ways the pension might be increased: buying extra years, and deferring (in its own right). Everything I've read is ambiguous in this respect.
Page 1
    • molerat
    • By molerat 20th Sep 19, 7:06 AM
    • 21,395 Posts
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    molerat
    • #2
    • 20th Sep 19, 7:06 AM
    • #2
    • 20th Sep 19, 7:06 AM
    http://www.legislation.gov.uk/ukpga/2014/19/part/1/crossheading/postponing-or-suspending-state-pension
    (3)Regulations may modify section 17(4) in relation to a person who has been an overseas resident during any part of the period for which the person's entitlement to a state pension has been deferred.
    https://www.gov.uk/deferring-state-pension/if-you-move-abroad
    If you move to a country that isn’t in the list, your extra payment will be based on the State Pension you’re owed at whichever is later of:
    So no deferral increase
    Last edited by molerat; 20-09-2019 at 7:17 AM.
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    • xylophone
    • By xylophone 20th Sep 19, 10:24 AM
    • 31,380 Posts
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    xylophone
    • #3
    • 20th Sep 19, 10:24 AM
    • #3
    • 20th Sep 19, 10:24 AM
    https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/825396/state-pension-deferral-if-you-reached-state-pension-age-before-6-april-2016-extra-information.pdf


    Does living outside the UK affect State Pension deferral?
    If you normally live outside the UK you can put off claiming when you reach State Pension age.
    When you finally do claim, DWP will work out how much State Pension you may get based on the amount you would have got if you had been claiming it at the time. This will include any yearly increases to the State Pension, even if you are living in a country where these increases don’t normally apply.

    Once you have started to get your State Pension, you will only get yearly increases to your State Pension and your extra State Pension if you are living in certain countries. These are:
    • countries in the EU and European Economic Area (EEA),
    • Gibraltar or Switzerland, or
    • countries with which the UK has an agreement on social security that allows yearly increases to be made (the UK means England, Scotland, Wales and Northern Ireland).
    For more information see: www.gov.uk/state-pension-if-you-retire-abroad/rates-of- state-pension
    • JohnWinder
    • By JohnWinder 20th Sep 19, 12:02 PM
    • 23 Posts
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    JohnWinder
    • #4
    • 20th Sep 19, 12:02 PM
    • #4
    • 20th Sep 19, 12:02 PM
    Thanks for the prompt replies.
    To be clear, this relates to pension eligibility reached before April 2016, so the 'extra payment' part is relevant as this is an entitlement under the 'old' regime.
    However, those two replies suggest different answers to my question, and I'm still not certain.
    'molerat' says: no deferral increase. But 'xylophone's' extract indicates that while living outside UK and deferring you are granted yearly increases 'even if you are living in a country where these increases don't normally apply'; this must be referring to indexation increases since these are the only annual increases which do normally apply in the UK after you receive the pension.
    Or is my logic flawed?
    • xylophone
    • By xylophone 20th Sep 19, 1:20 PM
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    xylophone
    • #5
    • 20th Sep 19, 1:20 PM
    • #5
    • 20th Sep 19, 1:20 PM
    I'd suggest that you contact the International Pensions Centre.

    https://www.gov.uk/international-pension-centre

    https://www.gov.uk/deferring-state-pension/if-you-move-abroad
    Last edited by xylophone; 20-09-2019 at 1:26 PM. Reason: add
    • molerat
    • By molerat 20th Sep 19, 1:34 PM
    • 21,395 Posts
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    molerat
    • #6
    • 20th Sep 19, 1:34 PM
    • #6
    • 20th Sep 19, 1:34 PM
    My second quote is for post 2016 SRA.
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    • xylophone
    • By xylophone 20th Sep 19, 1:46 PM
    • 31,380 Posts
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    xylophone
    • #7
    • 20th Sep 19, 1:46 PM
    • #7
    • 20th Sep 19, 1:46 PM
    https://publications.parliament.uk/pa/cm201516/cmgeneral/deleg2/160126/160126s01.htm



    Regulation 4 inserts a new part 7 into the State Pension Regulations 2015, providing for restrictions on the uprating of the new state pension for persons living overseas. As hon. Members will be aware, the state pension is payable worldwide, but upratings for people who are not ordinarily resident in Great Britain are generally restricted to people living in the European economic area, Switzerland, Gibraltar or countries with which there is a reciprocal agreement that provides for uprating. That has been the policy of successive Governments for the past 70 years, and these provisions extend the same policy to the uprating of the new state pension. We are, however, introducing a change in the way in which we treat deferral in overseas cases.

    Under the existing arrangements, when a person who has deferred their state pension while resident in a country where upratings do not apply finally claims, they will have both the amount of their weekly pension and their deferral benefit based on the current rate of state pension in force. That applies even though pension upratings would not have been received if they had not deferred their pension. The regulations remove that anomaly for those in the new scheme so that we treat people who defer their pension consistently, regardless of where they live.
  • jamesd
    • #8
    • 20th Sep 19, 5:28 PM
    • #8
    • 20th Sep 19, 5:28 PM
    Which is messy. Consider a person not claiming who lives abroad for ten years after reaching SPA (or reaches SPA while abroad for ten years), returns to the UK (for how long?) and claims while in the UK. Uprating for all ten years because they were in the UK when they claimed?

    The previous system was extremely simple with no potential for where you'd lived making a difference. Looks like added complexity to save benefit costs even more from people who are already badly treated.
    Last edited by jamesd; 20-09-2019 at 5:32 PM.
    • JohnWinder
    • By JohnWinder 21st Sep 19, 4:09 AM
    • 23 Posts
    • 25 Thanks
    JohnWinder
    • #9
    • 21st Sep 19, 4:09 AM
    • #9
    • 21st Sep 19, 4:09 AM
    That was useful to have the parliamentary debate proceedings. This is my take on it all:
    The parliamentary discussions in 2015-6 introduced the new state pension; I'm interested in what was then the 'existing' state pension (now the 'basic state pension').
    I'm assuming the parliamentary discussions I read reflect the legislation as it was passed - just guessing.
    I'm assuming arrangements applying to the new state pension don't apply to the (now) basic state pension, unless specifically mentioned in the parliamentary discussions.
    Those discussions indicate the new pension will have, as did the old, no annual indexation 'uprating' (I'm guessing that's what 'uprating' is) for some people receiving the pension outside UK; nor will the old arrangement change. Clear enough.
    But, says the discussion, there'll be a change to overseas deferrals - not specified if that's for the old or only new pension.

    It goes on: was the case, overseas deferral brought with it annual indexation uprating (just as occcured for UK residents presumably); but this was anomalous because non-deferral gave no indexation uprating. So the new pension will fix this anomaly by allowing overseas deferrals to be indexation uprated just as UK residents get, for new pension people.
    It seems to me that the new fix changed nothing for overseas deferred people if indexation is still going to occur because it already was occurring. Any anomaly (to do with no indexation for overseas pensioners vs UK pensioners) remained.

    From all that I take it that the answer to my question is YES: deferrals were indexed for the old pension and will be for the new state pension.
    Welcome any contrary views.
  • jamesd
    The answer is yes for those who reached state pension age before 6 April 2016 and no from then on.

    The anomaly being removed was that everyone got inflation increases - uprating - while deferring, wherever they lived. For those not deferring it depended on where you live. So the change made both depend on where you live.
    • JohnWinder
    • By JohnWinder 21st Sep 19, 8:45 AM
    • 23 Posts
    • 25 Thanks
    JohnWinder
    I have now found another source of information which is consistent with 'jamesd's' one line summary:
    www.legislation.gov.uk › uksi › pdfs › uksiem_20160199_en

    This is an explanatory memorandum to the new regulations and order 2016.
    The old pension is indexation uprated each year during deferral for all overseas people (as for UK residents). This provides a 'double benefit' from deferment, which the document suggests is not a deliberate strategy of those involved, based on the distribution of all people who defer.
    This double benefit is removed for those overseas {and are only eligible for the new state pension) who defer (and are already not entitled to uprating while collecting the pension); now, deferral increases alone apply.
    Last edited by JohnWinder; 21-09-2019 at 10:21 PM. Reason: clarity of last sentence.
    • Mordko
    • By Mordko 21st Sep 19, 1:04 PM
    • 433 Posts
    • 199 Thanks
    Mordko
    If Brexit does go through, countries in which Brits are discriminated by the UK must include this issue as part of any trade deal negotiation.
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