By Sarah Toyne BBC News Online personal finance reporter at the High Court

A High Court judge is considering his verdict in a case brought by a British expat alleging mass discrimination over the payment of pensions to hundreds of thousands of British citizens resident overseas.

Frozen pensions

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Earlier, in the second day of a two-day hearing, the court heard a defence of the British Government's policy of not increasing pensions for some expats in line with inflation.

James Eadie, representing the UK's Department for Work & Pensions, questioned whether the court had jurisdiction to decide on a case which could not be "divorced from economics".

Annette Carson, 61, is challenging the UK Government under human rights legislation on its refusal to uprate her pension each year.

The case could affect up to 430,000 pensioners, living in a number of mainly Commonwealth countries.

Pounds not rand

Mr Eadie said UK pensioners living in South Africa had no right under domestic law to have their pensions uprated.

He said the case was controversial, political and had an international dimension and questioned the right of the court to decide on a case that had implications for UK taxpayers.

He said that in Ms Carson's case there could be no expectation of any payment of an uprate.

There was a right to a basic pension, an additional pension and a graduated retirement benefit element.

But, he added: "It's not a right to any particular amount."

There was also a "compensatory effect" for South African pensioners because they were protected from UK inflation by living abroad and, having their pensions paid in pounds, were also protected from any falls in the value of the rand.

'Resentment'

On Monday, the court heard that thousands of British pensioners who have retired abroad faced "considerable hardship", "resentment" and "feel a burning sense of injustice".

Richard Drabble, QC, on behalf of Mrs Carson, said that 430,000 pensioners were facing a similar situation over the UK Government's refusal to increase their pensions each year.

According to figures submitted to the court, about 330,000 British expat pensioners have their pensions increased each year, otherwise known as "uprating", but the remainder do not.

Mr Drabble said that Mrs Carson faced substantial financial hardship as a result of the policy, which means that she will receive the same pension throughout her life - fixed at the rate when she first retired.

'Unique' policy

Mrs Carson, a divorced writer, moved to South Africa in the late 1980s.

She continued paying National Insurance while living in South Africa.

She currently receives �103.62 per week, including a basic pension of �67.50, an additional sum of �32.17 and a graduated pension of �3.95.

Mr Drabble said: "The policy of not paying an inflation-proof retirement pension is unique.

"No other state, so far as the evidence reveals, pays a contributory retirement pension abroad on anything other than its contemporary retirement rate."

Human rights

Mrs Carson is challenging the UK Government's refusal to uprate, citing Article 1, Protocol 1 of the Human Rights Convention.

Uprated pensions

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She claims she is also being discriminated against, on grounds of residence, contrary to Article 14.

The government has said it would be too expensive to uprate pensions, a move that could cost about �330m more.