The older expats facing poverty – thanks to Brexit and frozen pensions

Anne Puckridge isn’t scared for her future yet. But thanks to the post-Brexit fall in the value of the pound, that time may soon come.

When the 93-year-old second world war veteran and lecturer moved to Canada in 2001, she expected to live in modest comfort on her UK pension. What she hadn’t realised, however, was that pension would be frozen at the amount it was worth at the time she moved to North America at the age of 76.

“The recent fall in the pound has made a terrible situation even worse,” said Puckridge. “All my money goes on accommodation, food and the essentials of living. There’s nothing left. I live from day to day, with the knowledge and fear that if the exchange rate goes down any more, I’ll have to use up the last of my life’s savings and then, I will literally have no financial cushion left.”

Puckridge is one of the half a million or so British people whose pensions have been frozen after moving overseas, a rule that affects many living in – among other places – British Commonwealth countries, including Australia and Canada.

Those living in the EU, the US or a list of countries including Samoa, Macedonia and Puerto Rico, get pension increases in line with inflation due to various reciprocal agreements.

The frozen pension means Puckridge gets just £75.50 a week of her full UK pension of £155.65 a week. Since the Brexit vote and the 15% fall in the value of the pound which followed, Puckridge has had to trim her outgoings even further.

Puckridge, an intelligence officer in the war who worked on codes across the army, RAF and navy, lived a comfortable life in Stroud, Gloucestershire, before moving Canada to be close to her daughter.

Now, she is so poor that she can’t afford basic foodstuffs. She said she would soon have to give up her telephone and computer, and couldn’t remember the last time she bought new clothes.

“It’s absolutely scandalous, I can’t believe the British government can be so cruel to pensioners when they have our money: I have paid national insurance all my life,” she said.

But Puckridge is trapped: “I can’t afford to come back to the UK. I couldn’t afford to buy a property there – prices have gone up in the UK much further than they have here – and I can’t afford to rent either: I might live for another two decades. I’m trapped in Canada where prices are going up and my pension is going down. I have to worry about money every single day. I feel humiliated and ashamed.”

Figures released last year show that in September 2014, there were 1.24 million people receiving a state pension outside the UK. Just under half of these, around 560,000, were in countries – including South Africa, New Zealand, India and Japan – where state pension is frozen.

If Puckridge had moved to a European country or the US, her pension would have increased in line with inflation. Even if today, Puckridge were to visit the UK, her pension would be increased for the time period she was in the country.

However, since the post-Brexit slide in the value of sterling, it is not just retirees who have moved outside the UK and had their pensions frozen who are suffering. In response, Sir Roger Gale, the Conservative MP and chair of the all-party parliamentary group on frozen British pensions, has widened his campaign to include all retired UK citizens living overseas.

“The post-Brexit fall in sterling is extremely worrying for any pensioner living abroad whose main income is their state pension. Overnight, their income has crashed,” said Gale, who works closely with The International Consortium of British Pensioners.

“We’re talking about a lot of very elderly, very frail people living on retirement incomes, many of whom are already so badly off that they moved to warmer countries to save on fuel payments,” Gale said. “They’ve sunk all their disposable income into their properties. Their only disposable income now is their state income.”

Gale warns that these pensioners are trapped: they can’t sell their properties for what they paid for them, “because the sort of properties expats buy aren’t wanted by the local population”. They can’t buy homes back in the UK, because property prices have soared since they left. Returning to live in the UK by renting is insecure because they might live longer than they can afford to pay rent for.

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Gale is also concerned the situation will be further eroded during negotiations over the current reciprocal pension arrangements with EU countries. He criticises the “cavalier attitude of many politicians towards this group of extremely vulnerable UK citizens”.

“Will their state pensions be index-linked once we leave Europe?” he asked. “Will they still get their current healthcare and other vital payments, such as invalid and carer’s allowances? This all has to be negotiated and I fear will be conceded to get something more headline-worthy.”

Chris Tudor, 70, moved to Spain from Bristol in 1997 with his wife, 66-year-old Ray. The fall in the pound has meant Ray, a retired postmistress, must keep working as a cleaner in a local hotel, despite having planned to retire this year.

“The deflation of the pound is a big deal for us,” said Tudor, a retired firefighter. “It’s hit us very hard and happened so quickly: it happened in a single month. All our bills are much more expensive.

“If the exchange rate stays this low for another three years, we will have to sell our house and rent instead, and just hope that the money we would release would tide us over for the rest of our lives.”

But if the Brexit negotiations take away the Tudors’ current right to access Spanish healthcare for free, their situation will become acute, he said.

“That would be a major problem,” said Tudor. “We’re just about managing now but if we have to pay for healthcare as we age, it would be a catastrophe. A major blow.”

Rob Hallums, founder of Experts for Expats, said he had seen a 20% rise in enquiries from concerned pensioners around the world since the Brexit vote.

“Lots of these expat pensioners want to come back to the UK but can’t afford property here any more,” he said. “No one knows how far the pound is going to fall but it is likely to get worse before it gets better. Unfortunately for most people, there’s not much that can be done other than finding better ways of handling their finances.”

He advises people to stay where they are. “Pensioners shouldn’t move home when the situation is in such flux and emotions are so high,” he said. “Things might start getting better in a couple of years and no one knows what legislation will be for expats after we leave Europe.

“My advice is don’t panic and if you can get by without moving back to the UK, do that,” he added.

Harry Shindler, 95, has lived in Italy for 30 years. He has a son in Rome but lives alone near Pescara. “The state pension is my main source of income. As the pound gets weaker, I try to keep going by reducing my food bill and my heating bills, even though it gets very cold here. But if the pound continues to go down, the conditions are very serious,” he added. “It’s a very worrying business.”