06 September 2012

UK and Australia to discuss frozen pension agreement

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Discussions between the British and Australian governments are to open over the longstanding and controversial agreement affecting expats' pensions, an Australia minister has confirmed.

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The Australian minister confirmed discussions to scrap the controversial pension plan have been agreed upon.

Jenny Macklin, minister for families, community services and indigenous affairs, issued a statement confirming the matter had been brought up with Iain Duncan Smith, minister for work and pensions, and that they had agreed to begin discussions regarding scrapping the policy.

The controversial 'frozen pensions' policy means retired expats' pensions have not been increased in line with inflation since they emigrated. In some cases, retirees have received the same pension for as long as 20 years, in which time the basic British pension has practically doubled.

The policy is thought to affect almost 500,000 British retiree expats, over half of which live in Australia. The Australian government reportedly provides approximately 190,000 of the retirees with means-tested benefits but with more and more people moving to Australia, the cost to the Australian government is beginning to rise.

The controversial policy's critics claim Britain fails to support its expats while expecting the Australian government to use taxpayer money to subsidise thousands who paid into a separate tax system. Ms Macklin said the Australian government was losing patience with Britain's reluctance to discuss the issue.

"All UK pensioners paid into the National Insurance Fund under the same rules, in good faith, and the Australian government believes they should be paid their pensions under the same conditions no matter where they now live," read Ms Macklin's statement.

"I made my feelings on this issue clear to my UK counterpart. He's now agreed to look at the options that have been proposed by UK pensioners in Australia - it's a positive step forward on an important issue."

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