Expat Pensioners Not Entitled to Inflationary Increases


Excluding expatriate pensioners from index-linked pension increases that are available to UK residents does not amount to discrimination, according to a recent ruling of the European Court of Human Rights.
The case arose following a 2005 judgment by the House of Lords in which writer Annette Carson, who had been living in South Africa for 15 years, claimed pension rights equal to those of UK-resident pensioners. Ms Carson turned 60 in 2000 and was entitled to the same basic pension she would have received had she been living in the UK at the time.
Ms Carson had made all necessary contributions and also made voluntary payments after she emigrated. However, when in April 2001 the basic pension for UK pensioners was increased in line with inflation, Ms Carson did not receive an increase. UK pensioners ordinarily resident abroad are not entitled to the annual increase, unless the country in which they are resident has a reciprocal arrangement with the UK, which South Africa does not. All EU countries do have reciprocal agreements, but nearly 200 other countries do not.
The House of Lords did not support the claim and so Ms Carson and 12 other UK nationals applied to the European Court of Human Rights, claiming that the UK authorities had discriminated against them, contrary to Article 14 of the European Convention on Human Rights, which prohibits discriminatory treatment on a number of grounds.
It is established case law that differences in treatment only amount to discrimination if they do not have objective and reasonable justification. In the case of the expat pensioners, the Court took the view that it was for the UK authorities to decide what was in the UK’s best public interest based on knowledge of the prevailing social and economic conditions.
As far as the European Court was concerned, individuals ordinarily resident within the UK are not in ‘an analogous situation’ to those residing outside the territory. The Court was reluctant to find an analogy between applicants who live in a frozen pension country and pensioners resident in countries outside the UK where uprating is available through a reciprocal agreement.
National Insurance Contributions (NICs) are only one part of the UK’s complex system of taxation and the National Insurance fund is just one of a number of sources of revenue used to pay for UK pensions and other social security benefits. Payment of NICs on the same basis as other pensioners does not therefore guarantee that the same benefits will accrue.
The Court agreed with the UK Government and courts that the same high level of protection against discriminatory treatment on the grounds of race or sex was not needed in this case. Furthermore, the UK had taken steps to inform its residents moving abroad about the absence of index-linking for pensions of those resident in some countries.
The Court therefore held that there had been no violation of Article 14.

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