Retired expats lose pensions battle

British citizens in retirement overseas lost a High Court battle yesterday for the right to have state pensions uprated in line with inflation.

A judge in London rejected claims that the Government was unlawfully discriminating against tens of thousands of expatriates and ruled the matter was "political, not judicial". Mr Justice Stanley Burnton said: "The decision to pay them uprated pensions must be made by Parliament."

Annette Carson, a pensioner living in South Africa, had brought the case because the Department for Work and Pensions had refused to index-link her pension. Her legal action was supported by the South African Association of British Pensioners, and by officials and pensioners in Australia and Canada.

Of 900,000 pensioners living abroad, about 420,000 receive upratings, including those in the Channel Islands, the European Union, the United States, Barbados, Bermuda, Cyprus, Israel, Jamaica, Malta, Mauritius, the Philippines, Switzerland, Turkey and the former Yugoslavia. The rest, including those in South Africa, Australia, Canada and New Zealand, have their pensions frozen. The Government indexes pensions if there is a reciprocal agreement.

Lawyers for Ms Carson, 61, argued that the social security benefits uprating regulations were being operated in a way that amounted to unlawful discrimination, in breach of the European Convention on Human Rights.

A win for Ms Carson could have led to the Government facing an additional pensions bill of £390m a year.

Rejecting Ms Carson's application for judicial review, the judge said the Government had admitted its policy was illogical, with no consistent or coherent pattern, and was intended to save money.

But "a wide margin of discretion" had to be accorded to the Government and the court could not say the refusal to uprate all overseas pensions was "unreasonable or lacking in objective justification".

He ruled: "A government may lawfully decide to restrict the payment of benefits ... to those who are within its territorial jurisdiction, leaving the care and support of those who live elsewhere to the governments of the countries in which they live".

A costs order was made against Ms Carson – she can appeal – despite the judge admitting the case raised issues "of wide public importance and general interest".