PENSION GUIDELINES for British Expatriates
Brought to you with the compliments of British Age Pensioner Alliance
 Updated April 2012

 

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DISCLAIMER.
These Guidelines are intended to give information, in simple terms, to help British pensioners to negotiate the minefield of legislation in Britain, Australia and other countries, where the British Government freezes pensions payable to those Nationals who have chosen to live abroad.

For authoritative information, go to  the Direct Government Site and follow the link about pensions.

We trust that the information we offer will assist British residents overseas, who are either already pensioners, or who are nearing the date when they will become pensioners, to obtain the best possible financial future. The information we provide is not definitive and the final outcome of any personal investigation must be resolved by negotiation with the Department for Work & Pensions, and the equivalent body in the country in which you have chosen to reside.

Click for relevant addresses

Do you qualify for a British Pension - The Australian Pension - Australian Tax - Voluntary contributions
Rights while travelling - Home responsibilities protection - A pension for the wife -
The advantages of indexation - Moving Back to Britain
 Joining BAPA - Pension Transfers Etc

No 1. "Do You Qualify for a British Pension?"

If you are a migrant from Britain or worked in the UK, then provided that you paid full rate National Insurance contributions you are probably entitled to a British Age Pension. Pensionable age is 65 for men and 60 for Women, but the pension age for women is rising gradually to equal that for men. Once the retirement age for women reaches 65 it will start to rise for both sexes.

Note: membership of the NIF is deemed to have started at age 16. There are special provisions for people who spent time out of the work force.

To start the process of enquiring about your pension rights, click here Pension entitlement form  and follow the instructions.

Category A Basic Retirement Pension

If you reached retirement age before 6 April 2010 you will be subject to the old rules. If you reached retirement age on or after 6 April 2010 you will benefit from the new rules.

New Rules

To qualify for a full (100%) Basic pension you must have contributed for 30 years or more. Each qualifying year gives you 1/30th of the basic pension. You can get a part pension even if you contributed for only 3 years. Current proposals will increase this minimum to 10 years. But you may be allowed to catch up by paying voluntary contributions.

Old Rules

To qualify for a full (100%) Basic pension you must have contributed for most of your working life from age 16. The minimum pension payable is 25% of the standard rate, based on years of contribution, with a minimum of 11 years for men and 10 years for women. If your contribution record is less than this, you may not be eligible for any UK pension.

For each additional contribution year the percentage rises by 2% or 3% up to the maximum of 100%. Periods in which you did not contribute may nevertheless count as contribution years, earning you a higher percentage. Among such periods are those during which you may have lived and worked in a European Union country, periods of sickness, periods when you were allowed to be out of the work force because of home responsibilities and, of course, any periods in the armed services.

If you have not yet reached Pensionable age, you may be able to pay voluntary contributions, thus increasing your Basic pension.

It is beyond the scope of this guideline to list all the conditions. For details, contact the Department of Work and Pensions.

Category B Retirement Pension

An additional pension for the wife or husband of a pensioner is called a "category B pension". It can also be paid to widows and widowers. For details, jump to A pension for the wife

It does not matter if the spouse is not British and has never been or worked in the UK.

It has been reported to us that the DWP does not always tell people that a category B pension is possible.

If they have let you down (not an uncommon event!), write or fax and ask them. You may be able to get a very satisfying lump sum back payment. For address, see relevant addresses

Additional Pension

There are two kinds of additional pension: Graduated Retirement Benefit, relating to the period between 1961 and 1975, and the State Earnings-Related Pension Scheme, SERPS, relating to the period since 1975. In official literature SERPS is simply called "Additional Pension". Both of these pensions depend on the amount of earnings on which you paid contributions. There is no minimum amount; in the official booklet there is even an example of a woman getting a pension of £1.23 per week!

Contracted Out Pension

If your employer ran a contracted out pension scheme, or if you had a private pension, you will need to contact the Trustees or Managers of the scheme. Your previous employers or the Department for Work & Pensions (DWP) should be able to help you with this.

Widows' Pension

The widow of a British pensioner will usually inherit her husband's basic pension, plus one half of his graduated pension, plus a percentage of his SERPS pension. This percentage is 100% where the pensioner was due to retire on or before 6 October 2002, falling to 50% if the pensioner was due to retire after 5 October 2010.

Note: SERPS has been renamed "S2P" (State Second Pension). S2P is a continuation of SERPS under a new name with additional benefits for some pensioners.

For fuller information write to: The Pension Service International Pension Centre

Tell them your full name, your date and place of birth, your National Insurance Number if you know it, your last place of work in the UK, and which years you worked there. You don't need to tell them all of that, but the more you tell them the more likely it is that they will find you in their files. To help you do this, use our form at Pension entitlement form  you can print and post off.

For address, see relevant addresses

This form was prepared by BAPA to assist you in supplying the information The Pension Service will need to find you in their records.

No 2. "The Australian Pension"

For authoritative information, see the Centrelink web site

The following is a resume of how entitlements to a British Age Pension and the Australian Government Pension relate since the Social Security Agreement between Australia and Britain was terminated on 1st March 2001.

The Australian age pension is non-contributory, and it is means tested. British  migrants are not eligible for the Australian pension until they have held permanent residency rights for 10 years.

You will be disqualified from entitlement to an Australian pension for as long as your assets and income, including your British pension, exceed the limits specified in the Australian means test. Your British Age pension will remain unindexed, i.e., will remain frozen and you will get no compensation from Australia.

If you arrived in Australia and reached Pensionable age before 1st March 2001 you would have been entitled to an Australian pension, subject to the means test. Until you had been a permanent resident for 10 years, you would have been subject to a special version of the means test. The whole of your British Age pension and 50¢ in the dollar of any other income, would have been deducted from your Australian entitlement, after taking into account the free area.

The means test

50¢ in the dollar of your British Age pension and of any other income will be deducted, after taking into account the free area.

Another result of the termination of the Social Security Agreement between Australia and Britain is that Centrelink will no longer issue claim forms for a British pension. It will be necessary to apply to the British DWP in Newcastle.

If you have worked in the UK and paid contributions to the
UK Government scheme

You must arrange to draw any British Pension to which you (and/or your spouse) are entitled from the UK before you will be able to gain any Australian Pension. To check your entitlement write to the Department for Work & Pensions. For address, see relevant addresses

No 3. "Australian Tax"

Australian taxation law allows the Undeducted Purchase Price (UPP) of all pensions originating in the UK to be taken into account when calculating Taxable Income.

The UPP of any pension is the total value of all contributions made over the years during which you were earning entitlement from that fund. This total value is divided by the number of years during which you are likely to receive payments from the fund. If the pension is to be paid for life, the term will be based on the life expectancy of the pensioner, as set out in the Australian Life Tables. If, upon the pensioner's death, the pension reverts to another person, that person's life expectancy will be used, if it is longer.

The calculations are made in Pounds Sterling, the original currency of the pension, while the annual deduction for tax purposes will be the agreed amount converted into Australian currency at the average rate of exchange for the year in question.

The UPP deductions can be applied to all pensions received from the UK, whether private or government. If you have not claimed this form of deduction on your pension or pensions in the past, you can backdate your claim for a maximum of 3 years.

Allowance for these deductions is made in Section 27H of the Income Tax Assessment Act. In order to claim for UPP deductions you will need to provide documentary evidence of your contributions. A letter to your Pension Fund Managers or, in the case of a Government Pension, to the Dept for Work & Pensions in the UK, should get you all the information you need.

In the case of the UK Government National Insurance or Age Pension, you also have the option of calculating the annual deduction on the basis of 8% of the annual pension received (expressed in Australian currency). This is permitted by Australian Taxation Office Ruling TR93/13. Generally speaking the 8% option is likely to be more advantageous, so ask for both options and choose the better.

When applying you will need to provide the following information: (1) Date of birth; (2) Date pension commenced; (3) Term of pension, e.g. life, or a number of years. (4) Name and date of birth of the person to whom the pension reverts upon the claimant's death, if applicable.

It is well worth making a claim. Three years back deductions for a pensioner couple can add up to several thousand dollars, with possibly several hundred a year thereafter.

If you are unsure of how to make a claim, it might be worthwhile employing a tax accountant. As not all Australian accountants are aware of these regulations, as they apply to British Pensioners, you should give them this information.


No 4. "Voluntary Contributions"

If you have not yet reached Pensionable age, you may be eligible to make further contributions and thereby increase your future pension. Five or six years in arrears may be payable and you may also be able to pay a number of forward years. Options for additional contributions become more limited as retirement age approaches, but even after retirement you may be allowed to make up for earlier years when you did not pay National Insurance. Note that the DWP will only accept contributions for a full year or a multiple of full years. There is no advantage to be gained by increasing contributions beyond a total of 44 years. If you will be entitled to receive a pension, but your spouse will not, remember to claim for a spouse pension.

To check your entitlement, see relevant addresses

Tell them your full name, your date and place of birth, your National Insurance Number if you know it, your last place of work in the UK, and which years you worked there. You don't need to tell them all of that, but the more you tell them the more likely it is that they will find you in their files. To help you here you can use our enquiry form at Pension entitlement form.

Ask them about class 2 contributions. They are much cheaper than class 3. Contrary to what it says in the booklets, qualification for class 2 is not limited to the self-employed, so long as you can tell them that you are working.

Two Case Histories

Two cases have been reported to us of pensioners who were not told by the DWP about their right to make voluntary contributions. In both cases the pensioners were permitted to make payments in arrears. In one case the pensioner had his pension increased, and was awarded a lump sum back payment which exceeded the amount of voluntary contribution he had paid.

In the other case, a woman was told that as she had only nine year's contribution before marriage and emigration, she was not entitled to any pension. She was not told about the right to make voluntary contributions. Seven years later she found out about the right to make voluntary contributions and lodged a complaint. She was permitted to make contributions for six years in arrears, thus acquiring a pension of 35% of the standard rate. She has also received a lump sum in back payment, more than she paid in voluntary contributions.

No 5. "Rights while travelling"

During temporary visits to most "Unfrozen" countries

See also Pensioner benefits while visiting UK

Are you aware that it is possible for a Pensioner resident overseas with a frozen pension to claim uprating for the duration of your visit when visiting the United Kingdom and a number of (but not all) other countries where UK state pensions are uprated?

We urge you to do so, even if the claim only amounts to "a bob or two". We present this information to enable frozen pensioners to claim uprating for the period during which they may be fortunate enough to visit certain countries. As a result of enquiries made to the UK Department for Work & Pensions (DWP), readers should note the list of countries where this applies; it is considerably longer than most people realise.

Have a look at CF(N)701.pdf. The following text may be easier to read.

EUROPEAN COMMUNITY MEMBER STATES

The countries where your pension will be uprated are United Kingdom, European Community States, and any of the countries listed below:

With the addition of 10 new member States the EU is now constituted by 25 countries:
Austria, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxemburg, Malta, Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom

Iceland and Norway can also be included as, though not EU members, they are European Economic Area countries, where EC Regulations apply.
 

OTHER COUNTRIES WHERE PENSIONS ARE NOT FROZEN

You may also claim uprating during temporary visits to:
Barbados, Bosnia-Herzegovina, Croatia, Israel, Jersey, Mauritius, Sark, Switzerland, Turkey, Guernsey, Philippines, Yugoslavia
(Fed.Rep.) & Macedonia (Former Yugoslav Rep. of Macedonia).

UPRATING CLAIMS ARE NOT ACCEPTED FOR VISITS
TO CERTAIN OTHER COUNTRIES:

The DWP also advises that, although there is a reciprocal agreement to pay uprating to pensioners ordinarily resident in the USA, the agreement precludes the payment of uprating if you are simply visiting. Also specifically excluded in their own reciprocal agreement, for some mysterious reason, is Bermuda. Some editions of leaflet CF-N-701 also exclude Jamaica.

If you temporarily visit those countries from any frozen country you will not receive the uprating.

DON'T MISS OUT ON MAKING A CLAIM

Even if you are only visiting for a day or two, you should file a claim with DWP to receive your uprating. The current rules (which keep changing) state that a claim must be received within a month of your arrival in the UK, or other qualifying country. In our experience it is safer to tell them before your visit.

Here is the latest advice from the pension service. as you can see, they are less formal in their approach than they used to be.


Thank you for contacting the International Pension Centre with your email dated 24 March 2010.

There is now no need to complete forms, you can apply be e-mail and we will call you back or telephone us directly.

You can apply for an increased rate of benefit whenever you are in the United Kingdom (UK). We will need to know:

· your full name

· the date you are arriving and the date you are leaving

· your nationality

· an address and telephone number where you will be staying during your visit.

We cannot take this information any earlier than 4 weeks before you arrive in the UK. You must tell us about your visit within 28 days of your arrival in the UK if you do not do so before your arrival.

If you give us this information by e-mail within the time limits, we will contact you by telephone within the next 5 working days to confirm the details you have provided. For the security and protection of your personal details we will also need to verify your identity before further action can be taken and any changes implemented.

If this is not convenient you can call us on +44 191 218 7777 between the hours of 8am and 8pm (United Kingdom time).

Yours sincerely

Ken

+44 191 218 7777

International Pension Centre
Tyneview Park
Whitley Road
Benton
Newcastle upon Tyne
NE98 1BA

Email - tvp.ipccsst@thepensionservice.gsi.gov.uk


The only problem here is that Ken does not mention that you can get the upgrade while travelling in uprated European countries and in some of the uprated non-European countries. (But not for travel in USA)

 

No 6. "Home responsibilities protection"

HRP was introduced in the tax year beginning April 6th 1978 and can only be allowed for complete tax years . The purpose was to compensate mothers for staying at home to bring up their children so that they didn't lose out when assessing the number of years worked for their Old Age Pension calculation.

HRP is also available for years spent looking after sick or disabled persons.

It is supposed to be automatic for women who receive Child Benefit, but in accordance with usual policy, nobody don't tell you nothing!

Read about one pensioner's experience at Home Responsibilities Protection

This article also tells you how to claim.


No 7. "A Pension for the Wife"

If a man has a basic pension (*) from the British National Insurance Scheme, he can get an additional pension for his wife. It does not matter if his wife is not British and has never worked in Britain.
 
If the wife has not yet reached retirement age (*) the pension is an adult dependant supplement+. It is work tested and income tested. It is paid to the husband in addition to his own pension.
 
If the wife has reached retirement age then the pension is called "category B" and is paid to the wife. It is not means tested.
 
Be aware that DWP does not automatically convert a dependant supplement to a category B pension; it is necessary to apply.
 
The pension is in both cases almost 60% of the husband's basic pension.
 
(*) Basic pension is part of the total state pension. The husband may have a graduated retirement benefit (grb) and an S2P pension, but neither of these attracts a wife pension.
 
(*) Retirement age for a woman born before 1950 is 60. For women born after 1955 it is 65. For women born between 1950 and 1955 it is on a sliding scale.

(+) Adult dependant supplement, also called adult dependant increase, is being phased out. No new awards were made after 6 April 2010, and all such increases will stop in 2020.

You can download the (very long) application form from the Direct Government Site  or you can:

Write to The Pension Service, International Pension Centre (IPC)

For address, see relevant addresses

Where a woman has a pension in right of her own contributions, and it is less than 60% (approximately) of the standard pension rate,  then her pension and the category B pension will be added together to give a "composite pension", but there is an upper limit; she cannot get more than the current standard category B pension.

If she gets her own pension at age 60, the DWP may forget to tell her about category B pension when her husband turns 65.

For the history of the category B pension, see  History of category B pension

No 8. The advantages of indexation

Some people think that "Australia tops up my pension."

Many people think the above statement is true, and therefore freezing of pensions does not matter. They think that if their UK pension is indexed each year the Australian age pension will be reduced by the same amount as the UK pension is indexed.

This is simply not true.

To illustrate this, let’s take an example of a man who earned a full basic pension, and then retired to Australia in 2000. His basic pension will be £67.50 and frozen at that. If he has no other income but has an Australian pension the sums will be as follows (based on April 2012 Australian pension rates.):

Note: All the figures on which this table is based vary from time to time, especially the exchange rate. But the principle is still the same; you would be better off if your UK pension was indexed.

UK pension

£67.50 per week

Dollar amount per fortnight

$205.20 per fortnight *

Means test threshold

$150.00 per fortnight

Excess (205.20 - 150)

$55.20

Reduction in Australian pension (50% of excess)

$27.60

Australian pension, single rate.

$695.30 per fortnight

Total pension (205.20 + 695.30 – 27.60)

$872.90

* assuming conversion rate £1 = $1.52

If the freezing regime ended, the sums would be as follows:

UK pension

£107.45 per week

Dollar amount per fortnight

$326.60 per fortnight *

Means test threshold

$150.00 per fortnight

Excess (326.60 - 150)

$176.65

Reduction in Australian pension (50% of excess)

$88.30

Australian pension, single rate.

$695.30 per fortnight

Total pension (326.60 + 695.30 – 88.30)

$933.60

So you would be $60.70 per fortnight better off.

These figures are based on the single rate.  The figures for married couples will be different,
but the pattern will be the same. You will be better off !

You would not lose your pensioner card nor any of the fringe benefits that go with the pension.  Even if you have a SERPS pension and the indexation takes you over the upper limit, and as a result you lose your pensioner card, you will still be eligible for the Commonwealth Seniors Health Card and many of the fringe benefits.

No 9. Moving Back to Britain

What would happen if I decided to move back to Britain for permanent residence?

You would, of course, at first receive full uprating as if you were on a visit. But this would not be permanent, unless you established that you intended to settle there permanently. There is nothing automatic to say that after so many months you would be treated as a resident and keep your uprating on returning to Australia. Everything is in the hands of a Decision Maker,

This is the advice extracted from a letter received by a frozen pensioner in answer to his question on this subject.


If you were to return to the UK your State Pension would be uprated from the payday following the date of your return.

With regards to keeping your payments at the same rate, should you wish to return to Australia, there are many factors to be taken into consideration. Each case must be considered on its own circumstances. Whether an individual has become resident or ordinarily resident in the UK is a question of facts and degree.

Although each case is treated individually there are a number of factors which are commonly considered by the Decision Maker. I have bullet pointed these for your ease of reference:-

There is no mechanism in place to enable you to keep your UK rises while resident in Australia, unless you are classified as ordinarily resident in the UK and only visiting Australia.


The Addresses

The Pension Service, International Pension Centre (IPC)
Payments - Room TD 111
Tyneview Park, Newcastle upon Tyne, NE98 1BA, England.
Tel: from Australia 0011 44 191 21 87777
E-mail address: tvp.ipccsst@thepensionservice.gsi.gov.uk

Australian Taxation Office
GPO Box 9990,
in your capital city
Phone: 132861
www.ato.gov.au

Centrelink enquiries can be sent to:
The Manager, Centrelink International Services,
GPO Box 273C, Hobart,
Tasmania 7001.
Phone: 131673

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                                                                                                                                                                                                                               April 2012


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