441-00189 (Foreign affairs)

Under United Kingdom (UK) law, UK State Pensions are paid anywhere in the world. However, for many UK pensioners living in countries outside the UK, including in Canada, their pensions are not adjusted for increases in the cost of living. In other words, their pensions are "frozen" and paid at the same rate as they were when they first became entitled, or the date they left the UK if they were already pensioners then. This ultimately erodes the value of these pensions over time.

Canada's longstanding position is that UK pensioners who live in Canada have contributed to the UK pension scheme, and have therefore earned the right to be treated the same way as other UK pensioners.

The UK policy of non-indexation stems entirely from UK domestic law and could unilaterally decide to pay indexed pensions into Canada at any time. 

Over the years, the Government of Canada has raised, and has sought to address, this issue with the UK, including by proposing that the two countries negotiate a comprehensive Social Security Agreement (SSA) that would provide for the indexation of UK pensions. To date, UK officials have not engaged on this issue.

In early 2020, the British Secretariat of the All-Party Parliamentary Group (APPG) on Frozen British Pensions launched an inquiry regarding the impact of the UK Government’s approach to UK State Pensions paid to UK pensioners living abroad. The final report was released in December 2020. The Government of Canada presented a submission on UK pensioners living in Canada, for the APPG’s consideration. The submission is consistent with its longstanding position of support for UK pensioners regarding the non-indexation of UK pensions.

In November 2020, officials from the Department of Employment and Social Development Canada wrote to their UK counterparts, seeking their interest in concluding a comprehensive SSA between Canada and the UK. UK officials declined the Department’s request to conclude a comprehensive SSA that would provide for the payment of indexed pensions.

In early March 2021, motions were presented in both Houses of Commons in Canada and the UK regarding the UK’s non-indexation policy, urging the UK to negotiate a SSA with Canada that would allow for the indexation of pensions. 

In June 2021, the former Minister of Seniors, in her capacity as the Minister responsible for concluding SSA on behalf of the Government of Canada, sent a letter to her counterpart, the UK Secretary of State for Work and Pensions, to formally request the conclusion of a comprehensive SSA between Canada and the UK, which would provide for the indexation of UK pensions.

A trade agreement is not the appropriate mechanism for advancing the issue of pension indexation by the British government. Canada and the UK have committed to launching negotiations toward a free trade agreement and Canada is taking the steps necessary to prepare for the launch of negotiations, including having tabled a Notice of Intent to negotiate and objectives for the negotiations in Parliament. For both the Canada-UK Trade Continuity Agreement now in force and any future trade agreement between Canada and the UK, Canada’s focus is and will be on core trade elements, such as market access for goods and services.

The Government of Canada will continue to raise the non-indexation issue with the UK through various channels, where appropriate. Canada remains prepared to engage with UK officials should they choose to reconsider their non-indexation policy. 

The Government of Canada understands that the United Kingdom’s (UK) non-indexation policy is of great concern to many UK pensioners residing in Canada. It is important to note that the UK policy of non-indexation stems entirely from its domestic law. A trade agreement is not the appropriate mechanism for advancing the issue of pension indexation by the British government.

The Government of Canada will, however, continue to raise the issue of non-indexation of UK pensions directly with the UK. We have also made submissions to the All-Party Parliamentary Group on frozen British pensions, which was released December 16, 2020. Canada’s longstanding position has been one of a support for British pensioners regarding the non-indexation of UK pensions.