File your pension somewhere safe, like in a paper folder with “Pensions” written on it or something
Nigel Nelson is a regular contributor to Brits in Toronto, and is a member of the non-profit Canadian Alliance of British Pensioners (CABP), and a Director of the (also) non-profit International Consortium of British Pensioners (ICBP).
Here’s his latest thoughts on Brexit and pensions in Canada. All views are the CABP’s and Brits in Toronto does not endorse them and is not held liable in any way. As always, do your due diligence.
I was talking with my good friend James (real person, but name changed) the other day and he wasn’t very happy. But first let me tell you a little bit about James. He has spent his whole retirement living here in Ontario — he is 83 and first started drawing his UK State Pension in 1998.
At that time he was paid £64.60/week, which in those days meant he was getting about $150/week; this was when gas cost 52 cents/litre, and a loaf of bread cost just $1.30.
Today, because of the UK’s “frozen” pension policy, James is still getting £64.60/week, which immediately after the Brexit vote converted to $110/week ($40/week less than he was getting in 1998) — the British pound instantly fell 18% against the loonie. Meanwhile the cost of gas has gone up to 94 cents/litre ($1.15/litre in Western Canada), and a loaf of bread is now nearly $3. How can anybody be expected to live on 110 bucks a week?
James’ UK State Pension has fallen in real terms because the UK Government steadfastly refuses to annually uprate pensions for UK pensioners living in Commonwealth countries like Canada and Australia. The rate of inflation in Canada has increased and “frozen” pensioners continue to lose pace with the cost of living. How can that be right?
You can imagine what James said to me the other week when I told him that if he had retired to the southern side of Niagara Falls, in the USA, rather than the northern side in Ontario, or even if he had stayed in the UK, then he would have received about an extra $46,000 in pension money since he retired. What he said to me cannot be printed here!
James is not the only UK pensioner who is feeling the pinch. The CBC Vancouver radio station recently contacted the CABP as part of its research on the immediate effect of Brexit on UK pensioners living in Canada.
The UK State Pension is paid every four weeks and many pensioners cannot afford to pick and choose when they convert their sterling into Canadian dollars. They need the money as soon as possible because for some it is their only source of income. This means that they are hostages to fortune with regard to exchange rates — they have to take what is available on the day.
The graph below shows the fall in the £ against C$ over the last three months, especially the dramatic fall the day after the Brexit vote:
These rates are mid market rates at best; the rate received by pensioners is often a couple of cents less than shown in the graph above. This has hit UK pensioners living in Canada very hard and it’s also a similar story in Australia.
Brexit will have a significant impact on the “frozen” pensions issue. The UK is only legally obliged to pay the annual increase to pensioners who live in the European Economic Area (EEA), Gibraltar or Switzerland or countries that have a social security agreement with the UK that allows for cost of living increases to the State Pension. The EEA includes all EU countries plus three other countries: Iceland, Liechtenstein and Norway.
There are over 400,000 UK Pensioners living in the EU and over half of them live in EU countries that had pre-existing (i.e. prior to them joining the EU) social security agreements with the UK, which may now come back into force post-Brexit.
However, the other half live in EU countries where, like Canada, there have never been social security agreements that facilitate annual uprating of the UK State Pension.
If the UK is able to negotiate to join the EEA, like Norway — without being part of the EU — then one presumes annual uprating will then be restored to all EEA/EU countries.
However, one of the tenets of the EEA is free movement of people and so it is not clear how the UK would be able to join EEA as opposition to free movement of people is thought to be the main reason for the “Leave” vote of Brexit.
Regardless, the UK will not be able to ignore the new “frozen” pensioners in the EU. There are over 150,000 UK pensioners living in Canada who are hoping that whatever the UK Government does for the new “frozen” pensioners in the EU then they will do the same for those living everywhere in the world.
There can be no just or legal basis for treating the EU “frozen” pensioners any differently from the other “frozen” pensioners around the world! It is time to bring this unfair and immoral practice to an end, and then maybe my friend James can smile again.
Watch this space (as well as the CABP website and Facebook page) for further updates, both on Brexit and on how my friend James is managing to make ends meet.
On a separate issue, the CABP has recently been talking to the folks at CARP with a view to tackling some common issues that we have.
Nigel can be reached via e-mail at nigel AT britishpensions DOT COM.
Brits In Toronto 
It’s the same for my husband and myself, we live in South Africa paid all our dues and are battling with the exchange rate at the moment it is dropping dramatically.
I’m a Brit pensioner living in Thailand – so get mine frozen as well. Mine also dropped 10% after Brexit, but I supported Brexit before and after the vote. I was in the UK at the time and felt the euphoria of knowing the UK would soon be free of the Socialist Dictatorship that is the EU.
I cannot believe that any Brit pensioner has their pension as their sole source of income – it would be difficult in Thailand, impossible in Canada (where I recently retired from).
Just be patient. An economically free UK pound will regain all it has lost and add more as the world sees how impractical the Euro and the EU dictatorship is. In fact I predict it will no longer exist in 5 years.
Just a couple of points to be born in mind. The clause freezing pensions and which use to be a regulation has now been incorporated in the 2014 Pension Act as Section 20 and it is at the discretion of the UK government whether or not it pays pensıons let alone ındex lınkıng. Currently index linking in EU countries is obligatory under EU Law but this could be a serious problem once the UK has left the EU and EU Law is no longer applicable. The UK could seek to make agreements wıth indivıdual countries, abolish index lınkıng on new pension claims from pensıoners abroad after the exit date or simply end ındex linking altogether, world wide.
Second point and in response to Mike Smıth. I lıved ın Thailand until a couple of years ago and still have friends there many of who have no other source of ıncome than the UK State Retirement Pensıon but are OK….for now but I am afraid that today’s pensioners live on today’s pension and not pipe dreams of a hoped for recovery in the exchange rates – I see the baht dropped again today – and one which will not refund what they are already losing…as I am so doıng in Turkey.
The scandal is not the self ınflıcted wound inflicted by Brexit on those exchange rates and whıch affect all transactıons ınvolvıng overseas countrıes but the continued imposition of the frozen pension policy.
Great post
If James is a real person who is 83 how did he manage to start getting the state pension in 1990 when his age would have been 57, in 1990 a male had to be 65 years old before claiming the state pension, something not correct here.
Yes, it would seem that there may be a slight error here. The UK pension rate in 1990 was indeed, £46.90 per week and if that is what he received then James is a little older than he admits!
If he is 83 years old then his pension in 1993 when he became 65 would have been £56.10 per week.
The full pension today is £119.30 per week and either way I think that Nigel Nelson’s points about the illogical and irrational frozen pension scandal remain just as valıd.
You are quite right – I misread 1998 and 1990, and should have done the maths myself! This obviously changes some of the other numbers as well. I have revised the numbers in the article and I have asked if the revised article could replace the original. In the revision, my friend “James” is now actually getting $40/ week less, since in 1998 the £ converted to $2.37, wheres, post Brexit, you would have been lucky to get $1.70.
Thank you very much for pointing out the error in my article, and giving me the opportunity of revising it.
I hope the revised Article reads better now
Thanks for pointing this out – hopefully, the corrected example makes more sense…
We revised the numbers based on feedback, thanks all.
How can anybody live with only 110 bucks a week especially here at West Coast as all the prices are hiking with that inflation?
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Get so annoyed when American friends who married English brides yrs ago & their wives get annual increases yet we don’t in Canada yet we are a commonwealth country. Its so wrong.