The number of retirement age British expats is creeping steadily closer to 500,000. Many choose to spend their golden years abroad because of a lower cost of living, better quality of life and slower pace. For others, it’s all about the climate. Thousands move abroad every year in the hope that by retiring somewhere sunny they will finally shake off the perpetual dampness of Britain.
However, a recent ruling in Strabourg regarding British expats and payment of winter fuel costs have got some hot under the collar.
Earlier in the year a European Court of Justice decreed that the British government must pay all expat pensioners living in the EU a winter fuel allowance, no matter when they moved abroad or what country or climate they’re living in.
Under the old conditions Brits living abroad were only eligible for the annual 200 pound payout if they were still living in the UK when they began receiving their pension and if they moved abroad after 1988 – those restrictions now no longer apply. Every overseas household containing an individual in receipt of a UK pension qualifies for at least 200 pounds and if the pension claimant is over 80 the household gets 300 pounds.
Prior to the ruling the Department of Work and Pensions had to annually distribute roughly £15 million pounds among 73,000 OAP expats but there are real concerns that with over 370,000 more people entitled to payments under the new guidelines this bill could jump to £90 million or more.
Claimants of winter fuel allowance now only need to prove they have ‘a genuine and sufficient link with the UK’. An equally vague stipulation is that they have to have ‘lived or worked in the UK for most of [their] working life’.
Anyone born on or prior to July 5th 1951 is eligible to apply for a winter fuel payment this year, and though the Department of Work and Pensions can’t provide an exact estimate they are expecting a vast increase in claimants.
At the time of the ruling the Department of Work and Pensions also confirmed that ‘It is now possible people living in the European Economic Area and Switzerland [low-tax regions] may be entitled to Winter Fuel Payment.’
After the announcement it quickly became apparent that Work and Pensions Secretary Iain Duncan Smith was unimpressed by the development. He stated: ‘We will fight these ridiculous EU rules. It is ludicrous we could have to pay more pensioners living in hot countries.’
With the UK economy in turmoil and the government having to make unprecedented cuts to a variety of sectors, Duncan Smith seems unlikely to experience a change of heart. He continues to assert that he will fight the ‘ridiculous’ euro diktat.
Duncan Smith is currently pushing for the ruling to be revised and a temperature stipulation set. If a ‘temperature test’ is introduced then payments would only be issued to those residing in colder climates.
Duncan Smith’s argument is that ‘The winter fuel payment is about helping British pensioners with heating costs’ – something which isn’t an issue for many living in warmer areas. Although the winter fuel allowance is essential for many pensioners struggling to get by on limited funds in harsh winters there are parts of Spain, for example, where the average temperature for the winter months is as much as 17 degrees C. Similarly, there are parts of France which regularly reach 13 degrees C in December. Clearly, in this circumstance aid with heating bills would be somewhat redundant. Duncan Smith went on to add ‘We will protect taxpayers’ money and bring in a temperature criterion.’
The reaction to Duncan Smith’s protests has been mixed. Many British tax payers still living in the UK are supportive of his stance but much less enthusiastic stories from British expats have also been pouring in.
One couple, who moved to Spain in their sixties 10 years ago have commented that the fuel allowance is needed as ‘The winter evenings can be very cold therefore we do need to heat our home, homes that are built to keep the heat out! Every winter we spend approx 500 euro’s on wood logs alone trying to keep warm, we also run electric and gas fires’.
Another expat stated: ‘me and my wife live in Malta what is considered to be a ‘hot’ country. We moved here because of my health problems and not to just sit by the pool drinking ice cold beers as the lead story picture would like you to think. Until we moved here, I worked for 47 years, paying my taxes and insurance stamp. My wife worked nearly the same, stopping work only when our children were young. She too paid her taxes and insurance stamp, so in my opinion we are not claiming anything we are not entitled to. Just for the record, last winter in Malta was almost as cold as the UK without the below freezing temperatures, and there is no such thing as central heating in Malta. To keep reasonably warm you have to use a calor gas or electric fire which is very expensive, and in Malta you do not receive any help from the government.’
A further argument put forth by a British expat is that winter fuel allowance, if not needed during the winter months, could be used to pay for pricy air conditioning in the summer.
Concern over this issue could prove to be unduly as implementing a temperature rule would take quite some time to come to fruition. There are logistical problems attached to allocating regions with average temperatures and any change made to the winter fuel allowance criteria would mean wading into the lengthy process of creating new legislation.