That’s because they’ve retired abroad to a country where the state pension is “frozen”, meaning it’s locked at the rate they first received it and never rises again.
Under the triple lock, the state pension climbs either by consumer price inflation (CPI), earnings growth or 2.5%, whichever is highest.
The state pension increased by 4.1% in April this year and 8.5% in 2024, both in line with earnings. In 2023, it rose 10.1%, in line with CPI.
These big increases have helped protect pensioners throughout the cost-of-living crisis, sparing them immense hardship.
Yet many expats do not benefit at all. In some cases, they only realise the danger when it’s too late, which comes as a shock for those who automatically assumed their pension would keep pace with living costs.
Pensioners who retire in the EU, European Economic Area, Gibraltar, Switzerland, and other countries with a social security agreement with the UK, will continue to receive triple lock increases.
But move to Australia, Canada or New Zealand, where no such deal exists, and that uprating stops. In a cruel irony, these are popular expat destinations with Brits.
Myron Jobson, senior personal finance analyst at Interactive Investor, warned that the lost income spirals over time. “If you move to a country without a pension uprating agreement, your state pension will be frozen at the level you first receive it. That seriously erodes your spending power.”
Over 20 years, lost state pension could add up to almost £70,000, according to Interactive Investor calculations.
This assumes the retiree has full entitlement to the new state pension, and it is increases by 3.7% in April 2026, in line with the forecast CPI figure for September, followed by increases of 2.5% a year thereafter.
If it rises faster than that, which is likely, their losses could be greater.
Even shorter stays overseas can prove costly. Someone who moved abroad five years ago may already have missed out on £7,391 in total state pension. Over 10 years, their accumulated loss would rise to £15,838.
This is a serious source of frustration for many. Campaigners have long called for reform, but so far, successive governments have shown little appetite to change the rules.
The All-Party Parliamentary Group on Frozen British Pensions says around 450,000 people are now affected. Many live in Commonwealth countries with close ties to the UK, adding to the sense of unfairness.
While retiring overseas can offer a better quality of life, warmer weather or proximity to family, Jobson said it’s vital to check how any move could affect your state pension.
“Planning ahead is key. Make sure you’ve checked whether your chosen destination is affected and consider topping up any gaps in your national insurance record to maximise what you’re entitled to.”
He added: “Deferring your state pension can boost the amount you get, though it won’t help with uprating in frozen countries.”
Above all, he urged savers to build up private pensions to help bridge the gap, and to consider getting professional advice before making the move. The big overseas state pension triple lock freeze is unlikely to thaw soon.