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

Pensioners that 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 has rejected an appeal from a group of pensioners who wanted to receive increases in line with inflation. The decision is reported to have saved the British government at least £500m a year.

Inflation proofing increases only apply to UK pensioners who live in the European Economic Area or currently in 15 other countries where an agreement exists, such as the USA, but not in some countries like Canada, Australia and South Africa. Pensioners who have moved abroad want their UK state pensions to also rise in line with inflation each year.

The campaigners had argued that they paid into the pensions system when they were working in the UK so they should be entitled to the same benefits as those who remained in the UK; the country of residence now should make now difference.

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. The current basic state pension is £95.25 a week.

Estimates are that there are more than a million UK pensioners living overseas - with about half of them affected by the pensions freeze. It does seem unfair to Annuity Arrow because it should not matter which country a pensioner has moved to. Why should someone who has moved to one country be treated different to someone who has moved to another. What is the difference to a UK state pensioner in Canada compared to one in the USA?

If you are planning on retiring abroad please fully investigate the consequences on your British State Pension.