No More Pension Payments to Foreign Partners of UK Citizens

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No More Pension Payments to Foreign Partners of UK Citizens

Retiring abroad is a dream many people work towards all of their adult lives.

Although testing economic conditions have made escaping to the sun more difficult recently, thousands of people are still selling up and shipping off each year.

However, things are about to change for married couples in receipt of a pension.

After debating the issue for some time, UK ministers finally won support for their campaign to stop the British public contributing millions of pounds on an annual basis towards pension payments for foreign residents.

A loophole in the present law means that foreign residents who are married to a UK citizen are entitled to receive pension payouts based on their partner’s contributions, meaning that people that haven’t ever worked or paid tax in the British Isles are receiving taxpayer funds.

It was recently calculated that over 200,000 thousand people living abroad are receiving state pensions of as much as 3,500 pounds a year wholly based on the National Insurance contributions made by their partners.

The number of pensioners living overseas and in receipt of some/all of the married person’s pension has increased by 17 percent over the last decade, but that’s about to stop.

Tomorrow, during the Queen’s speech, it will be announced as part of the Pensions Bill that payments calculated on the basis of a spouse’s contributions will be barred from April 2016.

Steve Webb, UK Pensions Minister, said of the decision: ‘Most people would think, you pay national insurance, you get a pension. But folk who have never been here but happen to be married to someone who has are getting pensions. Women married to British men, we are getting more of them claiming a pension on his record. In some cases, they have never even set foot in Britain at all. [...] Say you are an American man and you marry a British woman, you can claim, if she has a full record of contributions, a pension of £3,500 a year for your entire retirement having never paid a penny in National Insurance. Most people would think that is not what National Insurance is for.’

Webb continued: ‘The fact that we pay over 200,000 pensions outside the country, many to people who may not even have visited the country, would strike most people as not fair. More than half are to people who have never put a penny into the British system. Don’t expect in future that when you marry somebody you acquire rights in the British system even if you haven’t put in. It’s not about nationality or where you’re living. It’s about whether you’ve put into the system.’

Although many politicians have argued that the changes to pension payments are necessary and fairer than the current situation, some industry experts are concerned that the decision may have been made too rashly.

As one pension specialist notes, ‘It is important spouses who relied on a partner’s pension contributions many years ago are not robbed of their rights. In the rush to appease Ukip supporters it would be really wrong for ministers to suddenly change the rules and take away pension rights [...] change is needed but must be managed in a fair, considered way.’

Existing pensioners will be unaffected by the changes due for announcement tomorrow.

What do you think?

Should the foreign partners of UK citizens be able to benefit from their pension contributions? Let us know!

The Expat Hub
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