What Corbyn’s Pension Campaign Means for You
Long before Jeremy Corbyn caused a UK political earthquake by storming to the Labour party’s leadership this summer, he was leading a campaign to change the way the UK sets the rates of pay for UK pensioners.
Now that he has gained power and influence as Labour’s leader, this old goal is drawing tantalisingly close. But what does he want to change? Why? And how likely is he to pull it off as an opposition leader?
The issue targeted by Corbyn’s campaign, Justice for Pensioners, relates to UK citizens who have contributed taxes and national insurance payments over a lifetime in the UK, but who choose to take their pensions in one of several countries where UK state pension payments are frozen.
As we wrote last month, when withdrawing your state pension abroad, the monthly amount you will be paid is frozen at the rate of pay at the time of your leaving the country.
This means that, for example, if I left the UK for a listed country in April 2010, when the state pension was £97.65 per week, then my pension payments would be frozen at this amount even as pensions in the UK continued to rise to today’s level of £115.95.
You can find a full list of countries where pensions are frozen here.
The basic idea is that this is unfair to those who choose to retire abroad in those certain countries. If they have contributed to the pension in the same way as those who remain in the UK, they should not be penalised simply for moving to a listed country, argue supporters of the campaign.
The issue is becoming increasingly pertinent as David Cameron locks in state pension changes set to be introduced in April, 2016. There has been much debate in the press over whether the changes will leave people better or worse off, but you can find the facts of the change here.
How Likely Is Corbyn Success?
Momentum is certainly building behind the campaign which is backed by Pensions Justice and Pension Justice. 558,000 expats are affected and Corbyn’s election success means this, one of his personal projects, is now firmly in the spotlight.
It remains to be seen whether enough cross-party support can be found to change the current state of affairs, but as George Osborne looks for enough cuts to clear away the national deficit, it seems unlikely to make it onto the menu of 2016 pension reform.
This article is for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions. Investments can go down as well as up and you may get back less than you invested.