Retirees planning to live abroad may not realise that the annual state pension increase does not apply globally. Although the state pension is paid worldwide, the yearly increase only applies if you reside in the European Economic Area (EEA), Switzerland, or a country with a social security agreement with the UK.
The “triple lock” ensures that the ‘new’ and ‘basic’ state pensions rise each year in line with the highest of the average annual earnings growth from May to July, September’s Consumer Price Index (CPI) inflation rate, or 2.5 percent. The most recent figures from the Office for National Statistics (ONS) indicate that average regular earnings growth stands at four percent (including bonuses) in the three months to June, while CPI is currently at 2.2 percent.
This suggests that those on the full new state pension are set to see weekly payments increase from £221.20 to £231.15, equating to £924.60 every four weeks. Similarly, the full basic state pension could rise weekly from £169.50 to £177.15, or £708.60 every four-week payment period.
However, around 453,000 state pensioners residing in countries without a reciprocal agreement with the UK Government, including Canada and Australia, have their state pension ‘frozen’ at the level it was when they left the UK.
Recently, a Freedom of Information (FOI) query has highlighted that pensioners residing in nations without a reciprocal agreement receive an average state pension of just £57 weekly. Specifically, 114,000 in Canada get £52, and 208,000 in Australia are provided with £56, reports the Daily Record.
In a move to bring clarity, the Department for Work and Pensions (DWP) has introduced an online guide on GOV. UK that details countries where the state pension increases annually.
UK state pension recipients living in the European Economic Area (EEA) and other nations with social security agreements with the UK—referred to as ‘bilateral’ or ‘reciprocal agreements’—generally receive annual increases in their pensions.
The 47 countries where the state pension is set to rise in 2025 include:
- Austria
- Belgium
- Bulgaria
- Croatia
- Cyprus
- Czech Republic
- Denmark
- Estonia
- Finland
- France
- Germany
- Greece
- Hungary
- Iceland
- Ireland
- Italy
- Latvia
- Liechtenstein
- Lithuania
- Luxembourg
- Malta
- Netherlands
- Norway
- Poland
- Portugal
- Romania
- Slovakia
- Slovenia
- Spain
- Sweden
- Barbados
- Bermuda
- Bosnia-Herzegovina
- Gibraltar
- Guernsey
- the Isle of Man
- Israel
- Jamaica
- Jersey
- Kosovo
- Mauritius
- Montenegro
- North Macedonia
- the Philippines
- Serbia
- Turkey
- USA.
However, the DWP‘s guidance notes: “The UK has social security agreements with Canada and New Zealand, but you cannot get a yearly increase in your UK state pension if you live in either of those countries.”
The issue, dubbed as ‘frozen pensions’, has galvanised public response; an online petition pushing for change has amassed over 172,400 signatures, demanding the cessation of this practice particularly impacting British retirees in non-reciprocal states despite having contributed National Insurance during their careers.
The International Consortium of British Pensioners, championing the rights of expats hit by ‘frozen pensions’, is spearheading the ‘End Frozen Pensions’ campaign to “end the injustice” faced by Britons overseas whose state pension fails to increase annually with the Triple Lock.
The campaign clarified: “They moved, often to be near family, to live in one of the countries without a reciprocal agreement to inflation link their state pension, so their pension is ‘frozen’ at the level it was at when they left the UK.
“Those in countries with reciprocal agreements are unaffected so if you were a pensioner in the USA you would continue to get an uprating, but if you lived just across the border in Canada you would not.
“We believe this is deeply unfair and arbitrary and penalises hard-working Britons.”
Furthermore, the International Consortium of British Pensioners highlighted that many impacted by the frozen state pensions are former nurses, firemen, police officers, other public servants, and some are military veterans.
