AT least half a million British pensioners who have retired overseas have had their hopes of seeing an upgrade to their state pensions dashed.

The European Court of Human Rights (ECHR) ruled this morning that the Government is not obliged to pay annual inflation-linked state pension increases to expatriates. It rejected an appeal by 13 expats led by Annette Carson, who moved to South Africa in 1989, that they were being discriminated against by the British Government.

The group claimed discrimination on the grounds that pensioners are treated differently depending on their country of residence. Pensioners retiring anywhere in the European Union, America and countries such as Israel and Barbados have their state pension increased each year in line with prices, just like a pensioner who stays in Britain.

Those living in most Commonwealth countries, including Australia, Canada, New Zealand and South Africa, do not. Their state pension is frozen at the moment they retire, or when they leave Britain if they have already retired. Over time, that results in a pension that falls further and further behind the uprated version, and their purchasing power steadily declines.

Ms Carson's pension is frozen at £67.50 a week, the going rate when she retired. But if she still lived in Britain, or any of the countries where state pensions are uprated, she would now be receiving £90.70 a week, the rate for the tax year that has just begun.Some expatriate pensioners in their 80s receive less than £10 a week. Victory in the case could have increased annual payments by hundreds of pounds.

The ECHR rejected the appeal by six votes to one. It said: "While there was some force in the applicants’ argument, echoed by Age Concern, that an elderly person’s decision to move abroad might be driven by a number of factors, including the desire to be close to family members, place of residence was nonetheless a matter of choice.

"The Court therefore agreed with the Government and the national courts that, in that context, the same high level of protection against differences of treatment was not needed as in differences based on gender or racial or ethnic origin.

"Moreover, the State had taken steps, in a series of leaflets which had referred to the Social Security Benefits Up-rating Regulations 2001, to inform United Kingdom residents moving abroad about the absence of index linking for pensions in certain countries."

The Department for Work & Pensions said: "We do not plan to make any changes to the current arrangements regarding the freezing of UK State Pensions. We will, nonetheless, study the terms of the judgement carefully to ensure that we continue to comply with our obligations under the terms of the European Convention on Human Rights."

Only one member of the court, Judge Garlicki from Poland, supported the pensioners' view. She said: "To my regret, I cannot subscribe to the Chamber's finding of no violation. In my opinion ... the difference in treatment has no objective and reasonable justification."

This was echoed by Gordon Lishman, director general of Age Concern, who said: “The ruling means that older people will continue to be penalised for wanting to retire abroad. We supported the action because it is hugely unfair that these pensioners have made their National Insurance contributions but are not getting their fair share in return.”

Three years ago, Ms Carson had a similar appeal rejected by the House of Lords.

The ECHR ruling in full

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