Estimated costs of uprating State Pension in frozen rate countries: 2024 to 2028
Published 19 July 2023
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This publication is available at https://www.gov.uk/government/statistics/estimated-cost-of-uprating-uk-state-pensions-in-frozen-rate-countries-2024-to-2028/estimated-costs-of-uprating-state-pension-in-frozen-rate-countries-2024-to-2028
Background
UK state pensions for overseas residents are increased in-line with the annual index-linked increases where there is a legal requirement to do so. An example of this is where there is a reciprocal agreement between the UK and the country of residence.
As of March 2022, there were around 480,000 recipients of the UK State Pension living overseas do not get State Pension increases – 84 per cent of those live in Australia, Canada and New Zealand.
This publication updates figures last published in 2019 on the costs of uprating the State Pension in frozen rate countries.
Results and methodology
Estimated costs of uprating the State Pension in frozen rate countries are:
| Year | Estimate cost (£millions) |
|---|---|
| 2023/24 | £860 |
| 2024/25 | £940 |
| 2025/26 | £930 |
| 2026/27 | £930 |
| 2027/28 | £930 |
| Total (2023/24 - 2027/28) | £4,590 |
Note: Estimated costs have been rounded to the nearest ten million and are reported in nominal terms.
Estimates of projected costs
1. The estimate is based on the latest available data (March 2022) from the 5% extract of DWP’s State Pension administrative data, the Quarterly Statistical Enquiry (QSE).
2. The QSE is used to estimate the volume of individuals in frozen rate countries and their State Pension amounts.
3. The State Pension amount, for all current and future recipients, is uprated (using the relevant indices) to the level they would have been if they had never been frozen.
4. To estimate the costs for subsequent financial years we make adjustments to the underlying caseload and associated costs by:
- applying mortality rates to existing cases, based on age and gender;
- adding forecasts of future State Pension claims, which are based on historical trends and expected changes in the population, and are adjusted for mortality; and
- uprating State Pension amounts using economic assumptions from the Office for Budget Responsibility at Spring Budget 2023.
5. The total cost for a given financial year is the difference between the uprated State Pension amounts and the frozen State Pension amounts.
As with all estimates of projected costs, there is a degree of uncertainty, however where possible we have taken steps to try to minimise any significant measurement error.
Statement of Compliance with the Code of Practice for Statistics
The Code of Practice for Statistics (the Code) is built around three main concepts, or pillars:
- Trustworthiness – is about having confidence in the people and organisations that publish statistics
- Quality – is about using data and methods that produce assured statistics
- Value – is about publishing statistics that support society’s needs for information
The following explains how we have applied the pillars of the Code in a proportionate way.
Trustworthiness
DWP analysts work to a professional competency framework and Civil Service core values of – integrity, honesty, objectivity, and impartiality. The analysis in this release has been scrutinised and received sign off by the expert Lead Analyst.
We protect the security of our data in order to maintain the privacy of the citizen, fulfil relevant legal obligations and uphold our guarantee that no statistics will be produced that are likely to identify an individual, while at the same time taking account of our obligation to obtain maximum value from the data we hold for statistical purposes. All analysts are given security training and the majority of data accessed by analysts is obfuscated and access is business case controlled based to the minimum data required.
Quality
The cost estimates are derived from rich State Pension administrative data. The method has been quality assured by DWP analysts. It applies the relevant up-to-date State Pension rates to uprate frozen rate amounts and accounts for the fact that, in future years, the frozen rate State Pension caseload will change.
Value
This ad hoc analysis provides an update on a previous costing to provide users with more up-to-date information.
This will reduce the administrative burden of answering Parliamentary Questions, Freedom of Information requests and ad hoc queries to ensure timely responses to public queries around uprating the State Pension in frozen rate countries.
The figures have been seen in advance by Ministers and officials, in line with the Code, where pre-release access does not apply for an ad hoc analysis release.
Where to find out more
Contact information
For press enquiries, contact DWP Press Office on: 0203 267 5125