Carson & others v the United Kingdom (European Court of Human Rights) – 4 November 2008


The European Court of Human Rights has confirmed that pensioners living in countries which do not have a reciprocal agreement with the UK for cost of living increases to pensions benefits, are not entitled to increases on the State pension they receive from the UK.

Background

Ms Carson (C) is a British National who emigrated to South Africa in 1989, becoming resident there in 1990. Between 1989-1999 she paid additional National Insurance Contributions on a voluntary basis in order to maintain her entitlement to a full UK State retirement pension. In 2000, she became eligible for the State pension, including a basic State pension of £67.50 per week. The entitlement has however been frozen at this level ever since. Had her basic pension been up-rated in line with inflation, the basic pension she would now be receiving would be worth £82.05 per week.

Under bilateral agreements with countries including US and EU members, the Government uprates the pensions of the British people who retire there. However, in other countries (including South Africa, Australia, Canada, Hong Kong, New Zealand and Trinidad & Tobago), State pensions are frozen at the rate at which they were first paid abroad.

In 2002, C brought judicial review proceedings to challenge the Government’s failure to index-link her pension. She argued that under the European Convention on Human Rights (the Convention), the entitlement to index-linking amounted to a right to receive an uprated State pension (under Article 1 of Protocol 1 – Protection of property), and as such should be protected. In addition, this was a right which should be protected against discrimination (under Article 14 of the Convention – Prohibition of discrimination).

The claim was rejected by the High Court in the UK (in 2002), the Court of Appeal in 2003 and the High Court in 2005. C therefore took her claim to the ECHR, together with 12 other British Nationals (variously living in South Africa, Canada and Australia) whose pensions had also been frozen.

Decision of the ECHR

The ECHR held that Article 1 of Protocol 1 “applies only to a person’s existing possessions and does not guarantee the right to acquire possessions”. As such, the applicants did not have a right under UK law to receive index-linked uprating to their State pension benefits while they were living abroad in counties with no reciprocal agreement with the UK. The ECHR also confirmed the view taken by the House of Lords that Article 14 “complements other substantive provisions of the Convention and the Protocols, but it has no independent existence since it has effect solely in relation to “the enjoyment of the rights and freedoms” safeguarded by those provisions.”

The claimants had argued that because they had contributed towards their State pensions via National Insurance contributions while they were working in the UK, they should be entitled an uprated State pension. The ECHR however found that National Insurance contributions are only one part of the UK’s “complex system of taxation and that the National Insurance Fund is one of a number of sources of revenue used to pay for the UK’s social security and National Health systems”. Because the State social security system is “intended to provide a minimum standard of living for those resident within its territory”, the fact that the expats had contributed to this general fund did not create an automatic entitlement to uprating of their State pension.

Furthermore, the position of C and the others was not analogous to that of pensioners living in countries which had reciprocal agreements in place, and although some of their countries of residence were geographically close to, and had similar economic conditions to other countries where the uprated State pension was paid, a simple comparison could not be drawn “due to differences in social security provision, taxation, rates of inflation, interest and currency exchange”.

A final argument based on the fact that some pensioners moved abroad to be close to family members, a right which should be protected under Article 8 of the Convention (Right to respect for private and family life), was also rejected. This was on the basis that place of residence is a matter of choice and, as such, is not a status which requires the same high level of protection as, say, sex or race.

Comment

This decision will no doubt have come as a relief for the UK Government as it does not have to uprate State pensions for (on some estimates) over half a million British pensioners who might have benefited from a decision against the UK. Following the judgment, the DWP has confirmed that it does not plan to make any changes to its current arrangements relating to the freezing of UK State Pensions.