bad news for British expats

Bad news this week for British expats who retired to the UAE.

The European Court of Human Rights ruled this week that British pensioners who retire here (as well as most other non-EU countries) are not entitled to inflation-linked increases that they would have received if they had never left their home. Those who never move to another country have their pensions periodically "up-rated" to adjust for the rising cost of living.

The upshot: British expats planning to retire in the UAE should make sure they are not making unnecessary contributions to the National Insurance Fund, says Keren Bobker, a financial planner with Holborn Assets in Dubai. Many expats make voluntary contributions to the fund in order to qualify for the maximum pension when they retire.

But because their pensions will be frozen, those expats may want to consider investing that money instead in a vehicle that will grow over time in order to keep up with inflation.

The case was first brought against the UK government in 2002 by Annette Carson, a British resident who retired to South Africa. She argued that she should be entitled to the same rights as a UK resident who spent the same amount of time working in the UK and made the same contributions to the National Insurance Fund.

The government countered that she made a voluntary choice to live in a country with a distinct economy and paying her the "up-rate" would be an inappropriate use of public funds.