With the Commonwealth Games just around the corner you'd think we'd be filled with enthusiasm for the substantial ties which bind us to the UK.

But about 240,000 people living in Australia who are entitled to British pensions have reason to feel very grumpy towards the UK. Their pensions aren't indexed and are slowly dwindling.

But they're fighting back in the courts and the court of public opinion.

Program Transcript

This transcript was typed from a recording of the program. The ABC cannot guarantee its complete accuracy because of the possibility of mishearing and occasional difficulty in identifying speakers.

Damien Carrick:

As the hype surrounding the Commonwealth Games grows by the day, we talk to some 'whingeing Poms', who appear to have a very good reason to be grumpy.

Geoff Sims: It may not set the world alight, but at least the electronic torch couldn't blow out in the stiff southerly wind that greeted the baton at Sydney Airport. Even the didgeridoos were no match.

Fourteen-year-old Sophie Healey from Auckland and 13-year-old Carly Roger from Sydney carried the light, the torch, the Queen's Baton, to deliver into the hands of the Prime Minister, eager as a child himself. Someone has counted 50,000 relay runners across the Commonwealth since the baton left Buckingham Palace nearly a year ago ­ and the kilometres too.

John Howard: This baton, that was sent on its journey in February of last year, has travelled 180,000 kilometres.

Damien Carrick: For the first time in its history, the Queen's Baton Relay has wound its way through each of the 53 Commonwealth member countries. But in 48 of these countries, hundreds of thousands of people entitled to British pensions may not have been in the mood to wave the Union Jack as the baton carrier jogged past.

Worldwide, about half a million people entitled to a British pension, most living in Commonwealth countries, do not have their pensions indexed by the British government. In other words, their pensions are not adjusted for inflation, and over time, dwindle in value.

About half these pensioners, almost a quarter of a million people, live here in Australia. And some are so incensed that they are taking the British government to the European Court of Human Rights.

Now to clarify, we're not talking about a means-tested welfare benefit. This UK pension scheme only covers paid workers. It's funded by mandatory salary contributions, and available only to those who've worked or contributed to the scheme for 11 years or more.

Jim Tilley, the Honorary Chairman of British Pensions in Australia, says British retirees in this country alone are being collectively short-changed about $450 million every year.

Jim Tilley: One classic case we always use as an example is a dear old lady; she was 99 and she died just a few months ago now. And that dear old soul came out here in the 1960s to join her daughter. She had just worked in the UK all her life, she'd gone through the Blitz, she had a husband who'd been on the Italy campaign and the North African campaign. She brought up two children in the London Blitz. She finally came out to Australia here in 1968.

The British pension then was, would you believe, four pounds fifty a week, and when that dear old lady died, last year, I think it was about July last year, she was still getting just four pounds fifty a week from Britain. And that to me is an absolute disgrace, and it's something for which the Brits should hang their heads in shame.

Damien Carrick: Now was that person, and people like her, are they entitled to Australian pensions?

Jim Tilley: Well it's interesting actually. The Aussies in their generosity took into consideration these people's situation, and that lady would have got an Australian pension. The other interesting thing is that the Australians tried to get the British to index the pensions; they've negotiated this for years, and the Brits just turned a 'Nelson ear' to them, and they've just played hardball all the time. And finally, around about the year 2000, Jocelyn Newman, who was then the Minister for Family Affairs here in Australia, just spat the dummy and said, 'Right, enough's enough', and stopped paying the British people coming over here, stopped them with access to the Australian pension scheme from I think it was March, 2001, and since then, any British person arriving out here who's on a British pension gets no access to the Australian pension until they've lived here for 10 years.

Damien Carrick: Does this rule mean that the burden to support people in Australia, and a number of other countries, does it perhaps fall on the Australian children and the Australian grandchildren?

Jim Tilley: Well that is the whole point. Because the British will not index the pensions, any pensioner who now comes out here has to consider whether he's going to be a burden upon his family out here. And it deters a number of people from migrating to join their families that are living out here. And of course if they've recently arrived since the year 2000, they get no access to the Australian Social Security system at all.

Damien Carrick: Now do you know of people who've actually moved back to the UK for this very reason?

Jim Tilley: Yes, a guy I spoke to some months ago said that he was, would you believe, retiring from Australia to the Philippines because in the Philippine the pension is indexed.

Damien Carrick: So, well that raises a very important point, that some countries do have reciprocal arrangements with the UK for pensions to be indexed. The countries of the European Union, the USA, Israel and the Philippines, but not Canada, Australia, South Africa, New Zealand and a number of, if you like, the traditional Commonwealth countries.

Jim Tilley: That's exactly the point, and that is the whole reason that we are taking this particular issue to court, and have done so. We've taken it to the High Court, the Appeal Court in London, and more recently the House of Lords. That was the basis of our case, that the British government discriminate against us, it's unfair, it's completely at odds with the concept of the Rule of Law, one of the major tenets of which is the law in Britain is fair. We don't believe it's fair that we should have made the same contributions to the British pension scheme as those people who've chosen to live and retire to Spain, or to the USA, or Israel, Turkey, Bosnia and very interestingly, some people say, 'Oh, it's the Commonwealth that are left out'. No, it's not the case, because there are some Commonwealth countries where the pension is indexed. One of them is Barbados, another is Jamaica, and yet not Trinidad, not Grenada, not Antigua, and the Leeward Islands. And this to us again is discriminatory. Why should one of the guys who's worked on the London tube trains driving it for 40 years, paid all his contributions, happens to live in Barbados, get an indexed pension, but the guy who worked with him who comes from Trinidad, goes home with his pension and it's not indexed. This is totally illogical, and that particular statement was made by Geoff Prosser, who was the Minister back in, I think it was about 1999 to the year 2000, he actually said, 'It's illogical, we can't justify it, but we can't afford it.' And that is the basis of the reason why they won't pay us the indexed pension. They can't afford it.

Damien Carrick: I understand this is a huge issue in South Africa, which is of course a developing country, and it doesn't have a well-resourced pension scheme. Can you tell me about how some of the people in the UK, based in South Africa, have been affected by this rule.

Jim Tilley: Well they're affected exactly the same as us, but even worse, because in South Africa, there is, as I understand it, no kind of Social Security to fall back upon, and consequently whatever they get from the UK is their income. And as you get older of course it just gradually reduces in its value. And I do have a story: some lady who lives here in Sydney did say to me that she's come over here from South Africa, not because of the pension issue, but for other reasons. But she did leave her mother behind with some family in South Africa, and her mother was getting older and older, her mother was getting into her 90s, her pension from the UK was just dwindling down to very little money at all. And ultimately, because her medical bills were beginning to become crippling to the family, what they did, they just put her in a blanket, put her on the plane, sent her back from Johannesburg back up to London, so that the family in the UK could look after her. In other words, she was imposed back upon the British pension scheme, where she would be getting at least an indexed pension up there, and a little bit more money. And that to me is absolutely appalling that the family are forced to do something like that, just because the British were so miserly and mean and parsimonious over this $400-million a year.

Damien Carrick: I guess that's about $A1-billion every year. I can see there are very good fiscal reasons why they might say to the British taxpayer, 'It's not in your interest or ours to rectify this anomaly.'

Jim Tilley: Yes that's a point that we get thrown at us regularly, and one of the reasons that we argue against that, is just this: that when you look at the amount of money that they receive from the National Insurance contributions, remembering they're compulsory, they're mandatory, they receive from the Actuary's Report last year, around about 68 billion pounds. So think of 400 million in relation to 68 billion. But more to the point, they have built up, by not paying us indexed pensions, they have built up a balance in that account now, which is approaching 34 billion pounds. Now even more, the Actuary says that they require one-sixth of what they spend on National Insurance pensions, and that one-sixth works out to around about 11 billion a year. So they've got 34 billion in funds, they need 11, according to the Actuary as a prudential balance. To my mind that means they're 23 billion over-funded, and 23 billion has to be taken into consideration when you consider the 400 million a year that they should be paying for us. So when you look at those figures, I don't think they have an answer, I think they're just being miserly and parsimonious.

Damien Carrick: And of course now a number of pensioners around the world I think four in Canada, couples in Australia, one in South Africa, are now taking a case to the European Court of Human Rights in Strasbourg.

Jim Tilley: We have indeed, we've got what's known as a composite case. And I think it's more than four, I think in fact there's around about seven or eight in Canada; definitely four, all of whom are members of British Pensions in Australia. And Annette Carson, whose case has been through the High Court, the Appeal Court and the House of Lords, we could only take a single action case in the UK, but once we go into Europe, we can bring a composite case. It's almost like a class action.

Damien Carrick: So the essential argument will be under the Human Rights Act of the UK, which is basically the European Convention on Human Rights ...

Jim Tilley: Article 14 of the Convention of Human Rights.

Damien Carrick: ... that this is discrimination, and that's what you're pleading.

Jim Tilley: That's the basis of our whole case, it is discrimination and it is unfair.

Damien Carrick: Jim Tilley from British Pensions in Australia.

In May last year, the majority of the House of Lords dismissed an action brought by South African resident, Annette Carson.

One of the Law Lords in the majority made the point that if the scheme is designed to provide a basic standard of living for people resident in the UK, and supporting people outside the UK is generosity, and well generosity doesn't need to have any kind of logical explanation or basis.

Six months later, Annette Carson, along with a number of others in Australia and Canada, have filed an action with the European Court of Human Rights based in Strasbourg.

Sydney barrister John Kernick has followed the cases, both in the British courts and now in Strasbourg.

John Kernick: Certainly some other European countries, such as France, Germany and Sweden, restrict the pensions that they pay to persons abroad. What the applicants in the present case say is that once you pay pensions abroad, and once you accept that there's some reason to pay them, that you shouldn't discriminate between different recipients purely on the basis of residence, that they're resident in Australia rather than America, for instance, or on the grounds of age. Now the age discrimination comes about really in two ways: one is that the pension that you get depends on the rate that's applying in the UK when you reach retirement age, so that people who retire later get a higher rate of pension. And secondly, it's alleged that there's discrimination over time, because as you get older, each year the pension becomes worth less in real terms, in the UK currency. Now that's what Lord Goodheart in the House of Lords, in the Parliamentary Chamber of the House of Lords, said was 'death by a thousand cuts', that the government effectively takes away a little bit of the pension each year for those people in real terms.

Damien Carrick: Playing Devil's Advocate, couldn't you say that, well the British government, up until the '70s, had this policy of entering into these agreements, then it realised that it was creating huge financial responsibilities for itself. It's chosen to change its policy. You can't describe that as discrimination, it simply decided to not be generous, it's decided to no longer open the door to more generous treaties with other countries.

John Kernick: Well that's certainly an argument, but what the applicants are arguing in the present case is that if you are going to introduce some cost containment measure, that you should do it in an even-handed way. Now whether that's by means testing, or by some other means, that's a genuine matter of policy. But the policy as it works at present, operates in a discriminatory way.

Damien Carrick: Jim Tilley, it's really interesting. Because of the Commonwealth Games, which is coming up here in Australia, there's a lot of hype about the Commonwealth, and I guess this issue calls into question what the Commonwealth actually means. Is it just a series of sporting events, or is it something about community, partnership, equality, or friendship?

Jim Tilley: Well my view is, being a Brit and living in Australia, and having effectively been naturalised here, and I've lived here for 35 years now, in fact I call myself 'a Possie', a bit of one, and one of the other. But one still sort of feels that the Commonwealth has something to offer, and therefore one of the issues in the Commonwealth is the fact that it's a partnership of equality, and yet we have got some in this Commonwealth, as I've pointed out, Jamaica and Barbados, and we can add Cyprus and Malta and Gibraltar and Mauritius to that, they're all countries where the pension's indexed, and yet others in these other countries, Canada, South Africa, Australia, New Zealand, Fiji etc etc, they're not indexed, and therefore if we have a Commonwealth where equality is one of the key missions of the Commonwealth organisation, it's part of the Commonwealth Heads of Government meetings' own mission that we strive for equality. And yet here we have a situation where equality doesn't exist.

Damien Carrick: There's a really interesting paradox here because the European Union has in many ways supplanted the Commonwealth as the UK's community or neighbourhood, yet we've got here - it's not necessarily an EU institution, but it's a European institution, the Court of Human Rights in Strasbourg, is the only forum which might rectify what many people regard as a snub to the Commonwealth family.

Jim Tilley: It's an interesting situation, isn't it?

Damien Carrick: Do you think the Australian government is doing enough to place pressure on the UK government to change this policy?

Jim Tilley: It's very difficult to say what they're doing. They don't tell us, other than they say that every time they meet, this particular issue is addressed, and it just gets pushed to one side, and I've been told this by Amanda Vanstone, I've been told it by Kay Patterson, who's just resigned as the Minister for this particular portfolio.

Here are some figures that just show by winning this particular case what it's going to do to Australia. We will bring somewhere in the order of $450 million of foreign exchange extra into this country. And the other thing is that by reducing the amount of pension top-ups that the Aussie government have to pay to the British pensioners that live out here, that is going to contribute somewhere in the order of $100 million to Treasury.

I don't believe they're doing what they could do to support us. When I say 'us', our challenge now is through the courts. I don't want to lobby the government to go out there and to fork out money, I wouldn't mind if they did, to help us, and I'm quite happy for them to continue to talk to the British government about this, and particularly when Tony Blair comes here in a few weeks' time to talk to both Houses of Parliament.

Damien Carrick: An opportunity to put in the pressure.

Jim Tilley: My oath.

Damien Carrick: Jim Tilley, from British Pensions in Australia.

Of course there is another side to this debate, but you're not going to get to hear that perspective. When I approached the British Department of Work and Pensions, I was told that neither the Minister nor a spokesperson could comment.

And we should point out that while our systems are very different, Australians who are entitled to an old age pension, can collect a fully-indexed pension anywhere in the world. And there are currently about 60,000 such offshore retirees. The majority live in Spain, the Netherlands, Italy and Greece.

And that's The Law Report for this week. Thanks to Technical Producer, Nick Mierisch, and of course thanks to program producer, the wonderful Anita Barraud.

If you have a friend who might be interested in today's program, do let them know that they can catch the repeat, which is tonight after the 8pm news.

Guests on this program:
Jim Tilley,
Honorary Chairman, British Pensions Australia
John Kernick,
Sydney Barrister
Presenter: Damien Carrick
Producer: Anita Barraud