Certain Pensioners to Lose £70K Over 20 Years

New research has revealed that state pensioners living abroad could lose out on nearly £70,000 in pension payments over two decades. Approximately 453,000 UK pensioners residing in countries that lack a reciprocal agreement with the Labour government are not eligible for annual State Pension increases, despite having contributed the required National Insurance payments to qualify for the pension.

According to calculations by interactive investor, these individuals could miss out on £37,477 over 15 years, £15,838 over 10 years, £3,666 over five years, and £443 in just one year. These estimates are based on the current full new State Pension rate of £11,973 annually, with an assumed 3.7% increase in 2025 (aligned with the Office for Budget Responsibility’s inflation forecast for September 2025) and a 2.5% annual rise thereafter under the triple lock mechanism.

Myron Jobson, senior personal finance analyst at interactive investor, emphasized the importance of forward planning. He advised individuals to check whether their intended destination is affected by pension freezes and to consider topping up any gaps in their National Insurance record to ensure they receive their full entitlement.

He added that while deferring your State Pension can increase the amount you receive, it won’t benefit those living in countries where pension payments are frozen. He also stressed the importance of building a strong private pension fund to maintain financial stability abroad and recommended careful budgeting to manage increasing living costs.

Jobson concluded by suggesting that individuals consult a financial adviser to fully understand the financial implications of retiring overseas and to prepare accordingly.

Edwina Melville-Grey, Chair of End Frozen Pensions Canada, commented: “While we don’t expect Mr. Carney to rely on the UK State Pension, thousands of pensioners living in frozen countries, including Canada, depend on it as a critical source of income.

"Although we recognize the significant responsibilities he currently faces, we hope he will find time to meet with our campaign’s lead advocate, 100-year-old Anne Puckridge, whose story powerfully illustrates the injustice at the heart of this issue.”