Pensions for many expatriates may not increase with inflation.

More than half a million UK pensioners living overseas will continue to have their pensions frozen after a European court decision.

Pensioners who moved to countries such as Australia and Canada only receive the level of pension paid at retirement - which might be only £6 per week.

The European Court of Human Rights rejected an appeal from a group of pensioners by an 11 to 6 majority.

The decision has saved at least £500m a year for the government, which said that its first responsibility was with pensioners living in the UK.

The expatriate pensioners say they have been fighting "tooth and nail" against the UK government in an eight-year court battle.

Pensioners who have moved abroad want their UK state pensions to rise in line with inflation each year.

Inflation-proofing only applies to UK pensioners who live in the European Economic Area or in 15 other countries, but not in some Commonwealth states.

John Markham, a pensioner living in Canada, said: "There is an image of people living well in the sunshine - but there are plenty of cases of real hardship."

“ The applicants did not contribute to the UK economy, in particular, they paid no UK tax to offset the cost of any increase in the pension ”

European Court of Human Rights

He said the decision was the end of the legal road, but they wanted to take the case to the "court of public opinion".

He told the BBC News website that they would take 48 hours to consider the decision.

The campaigners argue that they paid into the pensions system when they were working and are entitled to the same benefits as those who remained in the UK.

For the oldest overseas pensioners, who retired in the early 1970s, the pension can be as low as £6 a week. Those who retired in the early 1980s are left on about £30 a week, and those who retired in the early 1990s get about £50 a week.

There are more than a million UK pensioners living overseas - with about half of them affected by the pensions freeze.

If pensioners have moved to countries with a reciprocal arrangement - such as in the European Union or the United States - then they receive pension increases.

But if pensioners have emigrated to countries without any such agreement - such as Australia, Canada and South Africa - their pensions have been frozen at the level of when they moved overseas.

The Department for Work and Pensions welcomed the ruling and said the department's first responsibility was to support pensioners in the UK.

"We note that the court has found in favour of the government. We do not therefore plan to make any changes to the current arrangements, which allow for the exportability and up rating of UK state pensions," a department spokesman said.

"We will, nonetheless, study the terms of the judgment carefully to ensure that we continue to comply with our obligations under the terms of the European Convention on Human Rights."

The department has said that pensioners who chose to move to a country without a reciprocal pensions arrangement would have been aware of what it would mean for their state pension.

The case has seen a series of courts reject the arguments of pensioners including Annette Carson, who moved to South Africa in 1990.

After emigrating, she continued to make full contributions to her UK state pension and, on retirement in 2000, began to receive pension payments. But since then, the UK authorities have frozen the level of payments at £67.50 a week.

Judges at the European Court of Human Rights were the latest to declare that National Insurance contributions did not have an "exclusive link" to retirement pensions.

"As non-residents, the applicants did not contribute to the UK economy, in particular, they paid no UK tax to offset the cost of any increase in the pension," a statement from the court said.

The court said that it was hard to draw any genuine comparison with the position of pensioners living elsewhere.

But Michelle Mitchell, of Age Concern and Help the Aged, said: "This ruling is bad news for half a million pensioners whose only fault is to retire to the 'wrong' country in the international 'postcode lottery' of pensions up-rating."

SBI!

Retirement Pensions for UK Pensioners Living Abroad May Not Be Inflation-Linked