DWP’s ‘frozen’ state pension payments hit thousands of Brits Under Triple Lock impact

Thousands of UK pensioners living abroad are facing frozen state pension payments due to Department for Work and Pensions (DWP) rules. This means their state pension amount doesn’t increase annually, leaving many struggling with rising living costs.

If you’re planning to retire overseas, understanding where your pension will continue to grow and where it will stay frozen is essential. Here’s a breakdown of the DWP rules, the Triple Lock impact, and what this means for your retirement plans.

Why Are State Pensions Frozen Abroad?

The UK state pension is usually increased each year based on the Triple Lock system, which guarantees the highest of the following:

1. 2.5% increase
2. Average earnings growth
3. Inflation rate (CPI)

However, if you retire to certain countries, your state pension payments are frozen at the amount you received when you left the UK. This happens because the UK doesn’t have a social security agreement with some nations.

Countries Where Your Pension Won’t Increase:

• Thailand
• Australia
• Canada
• New Zealand
• South Africa
• India
• And many others without a UK social security agreement

Countries Where Your Pension Will Increase:

• European Economic Area (EEA) countries (like Spain, France, and Italy)
• Gibraltar
• Switzerland
• Countries with a social security agreement with the UK (e.g., the USA, Jamaica, and the Philippines)

How Much Is the UK State Pension in 2024/25?

The UK state pension rates differ based on when you were born and whether you qualify for the new or basic pension:

Pension Type	Weekly Amount	Annual Amount
New State Pension (for men born on/after 6 April 1951 & women on/after 6 April 1953)	£221.20	£11,502
Basic State Pension (for men born before 6 April 1951 & women before 6 April 1953)	£169.50	£8,814

Important:

• 35 years of National Insurance (NI) contributions are required for the full state pension.
• 10 years of contributions get you a reduced state pension.

Real-Life Impact of Frozen Pensions

A UK pensioner who retired to Thailand recently expressed frustration:

“I retired abroad in Thailand, and my state pension has been frozen as a result. Why is this the case? And how on earth can this injustice continue to be tolerated?”

Despite paying into the UK system for decades, thousands of pensioners like them find their pension stuck at the initial amount they received when they left the UK. Over time, inflation erodes the real value of their income, making day-to-day expenses harder to manage.

Why Does the DWP Freeze Pensions Abroad?

The UK Government justifies this policy by pointing to international agreements. Pensions are frozen in countries without reciprocal social security agreements. These agreements ensure both nations adjust pensions regularly.

Critics argue that all pensioners contributed equally and should receive the same annual increases—regardless of where they live.

Tom Selby, from AJ Bell, warned pensioners:

“Understanding the financial implications of retiring abroad is crucial. If you move to a country without a social security agreement, your state pension will remain frozen.”

How to Avoid Frozen Pension Payments

1. Check Your Destination Country

Use the UK Government’s pension advice website to check if the country you’re retiring to has a social security agreement.

2. Review Your NI Record

Ensure you have enough National Insurance contributions for a full or partial pension.

• Check via your personal tax account on GOV.UK.

3. Choose Where to Receive Payments

You can have your pension paid into:

• A UK bank account (payments in GBP)
• A foreign bank account (payments in local currency, subject to exchange rates)

Tip: If you choose a foreign account, ensure it can receive international payments.

Upcoming Changes: UK Pension Age Increasing

The UK state pension age is currently 66 but is set to rise to 68 in the coming years. This change is part of the government’s long-term plan to adjust pensions based on life expectancy trends.

Who is affected?

• People born after April 1970 will likely have to wait until 68 to claim their state pension.

Triple Lock and Its Role

The Triple Lock system ensures pensions grow annually. However, this protection applies only to pensioners living in the UK or in countries covered by a social security agreement.

For those abroad in frozen pension countries, the Triple Lock doesn’t apply, meaning their pension won’t keep pace with inflation.

Should You Still Retire Abroad?

Retiring abroad can offer better weather and a lower cost of living, but the long-term financial impact of a frozen pension is significant.

Pros of Retiring Abroad:

• Warmer climates (e.g., Spain, Thailand, Australia)
• Lower living costs (in some regions)
• New lifestyle experiences

Cons of Retiring Abroad with a Frozen Pension:

• Pension freezes reduce buying power over time.
• Healthcare costs might be higher outside the NHS.
• Exchange rate fluctuations can reduce your pension’s real value.

Tip: Retiring to a Triple Lock-approved country (e.g., Spain or the USA) helps avoid pension freezes.

Need Help with State Pension Abroad?

Contact the International Pension Centre (IPC) for advice:

• +44 191 218 7777 (Mon–Fri, 9:30 am–3:30 pm UK time)
•  Visit GOV.UK

The decision to retire abroad is exciting, but pension freezes can cause financial strain in the long run. Check your destination’s rules, review your NI record, and speak with experts if unsure.

Retiring in a country with a social security agreement ensures your pension keeps up with inflation—providing peace of mind and financial stability during your retirement years.

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