Strasbourg blow to expats in index-linked pensions case

Thirteen British expats who brought a test case to have their pensions index-linked have lost the final possible appeal against the government's decision not to up-rate them in line with those of pensioners living in Britain.

In a judgment this morning the Grand Chamber of the European Court of Human Rights held that the decision to freeze the pensions of British nationals who have retired abroad at the level in force when they started drawing it was not a breach of their human rights.

The Strasbourg judges found in Carson and Ors v United Kingdom (application 42184/05) that the claimants were not in the same position as pensioners who took retirement in the UK or in a country with which the UK has a reciprocal agreement, such as the US and EU member states.

Claiming the contrary would be based on a misconception of the relationship between National Insurance contributions and the state pension, the court said. Unlike private pension schemes, NI contributions had no exclusive link to retirement pensions.

The judges held by an 11/6 majority that there had been no breach of article 14 ECHR on the prohibition of discrimination, combined with protocol 1 on the protection of property.

The case was fought by writer Annette Carson, who moved to South Africa a few years before taking retirement, and other expats who retired in Australia and Canada, with which Britain has no reciprocal social security arrangements.

Carson had continued to make full contributions to her UK state pension until she reached retirement age in September 2000. She was entitled to a basic state pension of £67.50 a week. The current weekly state pension in £95.25.

In 2005 the House of Lords rejected her appeal, with Lord Hoffmann saying there was 'nothing unfair or irrational about according different treatment to people who live abroad'. The system was not intended to maintain the living standards of inhabitants of other countries, he said, even if they had past connections with the UK.

The case would have affected more than half a million expats, potentially costing the government in the region of £0.5 bn in pensions adjustments every year.