Not a Great Month for Pensions
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A couple of bits and pieces this time round. First the recent decision of the European Court of Human Rights dismissing an appeal by expat pensioners that they had been discriminated against because their pensions had not been increased in the same way as pensioners who remained in the UK.
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This is an extremely long running eight-year saga, originally brought by a Mrs Annette Carson, who had moved to South Africa several years ago. She and a group of other expats argued that their UK State pension should rise with inflation each year. They failed at every court in the UK and now in Europe. Inflation proofing does apply to some expats who happen to have retired to sunnier climes in the EU (and in the US), but not for those in South Africa, Australia and Canada. The Courts consistently agreed that although the pensioners may well have continued to pay National Insurance Contributions for some time after leaving the country, these contributions are not exclusively linked to state pensions. In particular, since they didn’t contribute to the UK economy and paid no UK tax to help offset the increases (which could amount overall to £500 million a year), there seemed no reason to extend the inflation proofing to those pensioners.
This comes as no great surprise to those of us who have been following the story for some time. The only shame is that no one had the guts to say to the pensioners after the House of Lords and the European Court had both rejected the claim, ‘Look darlings, you have no chance of success. Just give it up as a bad job and enjoy your Pina Coladas…’
Next, a return to my favourite current bugbear, NEST. The Government has just announced that the scheme will be funded by a 0.3 percent annual management charge, plus a charge on contributions of around 2 percent until the costs of setting up the scheme have been met.
Sneaky to say the least, and it will result in the low to middle earners (who will be the majority of NEST members) immediately losing a significant chunk of their already meagre pension savings. It is likely to take 20 years or so before the costs are recouped, so a whole generation will lose out. Nice one, DWP.
Jennie Kreser is Silverman Sherliker’s corporate pensions partner, and can be reached on jik@silvermansherliker.co.uk or by calling +44 (0)20 7749 2700.
Follow Jennie’s blog at http://www.pensionlawyerblog.com/
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