frozen pension - University of Birmingham

The Financial Consequences for British Retirees Abroad

Chabala Hall

State pensions in the UK offer a crucial financial safety net in retirement, ensuring a stable income when individuals stop working. They are especially vital for those without private pensions or personal savings, helping maintain a decent standard of living.

Recent data from the Department for Work and Pensions (DWP) shows that over 40% of the 1.12 million pensioners living abroad are affected by frozen state pensions (Interactive Investor, 2024). Thousands of retired British expats do not benefit from the uprating of the ‘Triple Lock’ and consequently are only receiving £3,000 a year on average—around £7,000 less than retirees living within the UK (Money Week, 2024). So what are the consequences for those who are unable to access their full pension? And how does this impact their financial wellbeing?

The Impact of Frozen State Pensions

The UK state pension is designed to increase yearly in line with inflation, ensuring that its value does not erode over time. This system, known as the ‘Triple Lock,’ guarantees that the pension increases by the highest of the following three factors: the average percentage increase in UK earnings, the percentage growth in UK prices, or 2.5% (Gov UK 2025). This system is designed to protect pensioners’ financial wellbeing by maintaining their purchasing power.

However, the UK’s Frozen State Pension Policy means that British retirees in most countries, those without reciprocal social security agreements with the UK, are not eligible for Triple Lock uprating. As a result, their pensions remain frozen at the level they were first received while abroad. This leads to a steady decline in the real-term value of their pensions, leaving them vulnerable to financial hardship and poverty.

The Story of Anne Puckridge

UK war veteran Anne Puckridge moved to Canada for retirement to be closer to her daughter, only to find her state pension frozen at the 2001 level of just £72.50 a week (The Guardian, 2024). Over the last 23 years, this has cost her around £50,000 in lost income compared to if she had remained in the UK. A significant issue is that Anne, like many others, was not informed about the frozen pension policy when she communicated her plans to DWP. She only became aware of it when she failed to receive an expected increase in her pension.

Anne explains how this has affected her financial wellbeing. Despite having lived and worked in the UK for most of her life and contributing towards National Insurance for years, she is excluded from the full potential of her state pension. She describes having to limit essential purchases and finds festive seasons like Christmas or birthdays “embarrassing rather than exciting.”. Others in similar situations have expressed concerns about losing their homes, struggling to cover everyday expenses, and experiencing pensioner poverty (International Consortium of British Pensioners & National Pensioners Convention, 2016).

What Are Excluded Pensioners Doing Instead?

Because of this exclusion, some pensioners, like Anne, are forced to rely on financial support from family members, while others have had to return to the UK—often leaving behind family ties and communities. This highlights further concerns: what happens to pensioners without family support who are left vulnerable to pension poverty due to this exclusion?

Another issue to consider is how the frozen pension policy may act as a barrier to emigration. This is particularly relevant when considering Britain’s ethnic minority communities with cultural and familial ties to countries where pensions remain frozen. Black, Asian, and other minority ethnic retirees may be disproportionately affected by this exclusion, limiting their choices in later life. It’s important to consider this as ethnic minorities are already disproportionately vulnerable to financial exclusion (Adami 2022).

Can the Policy Be Reformed?

Calls for policy reform have been ongoing. While the government has resisted change, citing the cost of uprating pensions globally and potential back payments, supporters argue that emigrating pensioners reduce the strain on public services such as the NHS, making the financial burden less substantial. In addition to full uprating, partial uprating has been suggested as a compromise by the International Consortium of British Pensioners & National Pensioners Convention. However, this still does not fully address the financial insecurity faced by affected pensioners. It doesn’t break down the barrier of emigration. It also doesn’t prevent the decline of the value of people’s pensions, still leaving them vulnerable to financial insecurity and bad financial wellbeing.

A Shift in Financial Responsibility

The frozen pension policy, in place since 1945, reflects a broader and more recent shift towards individual financial responsibility. The UK increasingly encourages people to fund their retirement through private pensions and personal savings (Price & Livsey 2013). While this may promote responsible financial planning, it does not account for disparities in financial literacy or the accessibility of resources necessary to make informed financial decisions.

The Need for Reform

The consequences of frozen pensions are clear: financial hardship, loss of dignity, and difficult choices for pensioners. As discussions around pension reform continue, it is crucial to address these inequities to ensure financial security for all British retirees, regardless of where they choose to live.