Kym Richardson (Kingston, Liberal Party) Share this | Hansard source

I second the motion. I rise today to support the motion before the House. Australia now has 242,200 residents whose UK non means tested state pensions are frozen. These represent about 46 per cent of the 520,000 UK pensioners worldwide who do not receive regular inflation upgrading to their UK pensions. A further 150,000 living in Canada, 35,000 living in South Africa and 34,000 living in New Zealand are similarly affected. This practice of freezing pensions is wholly unfair and discriminatory—across the nation, let alone in my electorate of Kingston. Many UK pensioners living overseas do have their pensions increased annually, as expected given their lifelong mandatory payments into the national UK scheme, and Australia fully indexes the pensions of its expatriate pensioners living in the UK.

The UK pension arises because everybody who has worked in the UK—that is, for about 10 years for women and 11 years for men—pays into the National Insurance, NI, fund each week, and it is from this fund that today’s contributors fund state pensions for today’s pensioners. About 450,000 UK expat pensioners do receive regular inflation adjustments courtesy of bilateral agreements. These fortunate pensioners live in such countries as Turkey, the Philippines, the USA, Israel and the EU countries. Because of this illogical state of affairs, it is claimed that the UK pensioners in Australia, Canada et cetera are being discriminated against on the basis of their country of domicile. The UK government complains that it does not wish to impose on current contributors the cost of £420 million per year to up-rate all pensioners worldwide and that contributions are for the pensioners at home. Currently this claim is a fabrication, because the NI account has a forecast balance at 4 August of £43.3 billion. The actuary writes that it ‘is significantly above the required prudential balance’.

This prudential balance should be about £11.7 billion. The forecast excess funds therefore approximate to £31.6 billion. Four hundred and twenty million pounds per year represents about 0.53 per cent—a mere fraction—of the total £75 billion annual 2007-08 income from NI contributions. Pension fraud alone cost the UK government many times this amount. Moreover, interest income for the NI fund approximates to £1.6 billion per year in a low-interest, low-dividend environment. By expats living away from the UK, almost £1 billion per annum in National Health costs are saved, significantly more than the cost of the indexed pensions that pensioners are trying to recover. This alleged discrimination is the subject of an ongoing legal case, which has been heard and lost in the House of Lords. Lord Carswell, however, dissented. He was of the opinion: ‘There is no justification for paying some pensioners less than others.’

In support of this approach, the Commonwealth’s Singapore 1971 and Harare 1991 declarations unanimously commit the Commonwealth Heads of Government to foster human equality among all in the Commonwealth. One must ask why some Commonwealth residents, with indexed pensions, are treated more equally than others, who do not have their UK pensions indexed.

Britain boasts of and promotes its adherence to the rule of law, which, when defined, includes the fact that British law is supposed to be even-handed, promoting equality and fairness as its main aims. Again, how does this rank when one considers the treatment meted out to those UK expat pensioners who have chosen to retire mainly to Commonwealth countries? I reiterate: Australia fully indexes the pensions of its expatriate pensioners living in the UK. I call on the Australian government to take this issue to the Commonwealth Heads of Government in Kampala in October 2007 and I urge the UK government to end the unfairness in the current indexation of overseas UK pensions.

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