British Expat Pensioners Lose up to 50% Buying Power

New research from one of Britain’s biggest pensions administration companies indicates that British retirees living overseas may be losing up to half of their pension income as a result of adverse currency fluctuations.

The research, which was completed by Equiniti, one of the largest pensions administrators in Britain, found that many British retirees who have opted for a life overseas are now struggling financially as a result of the weakening pound. Individuals who have invested their pensions in UK funds are now finding that currency erosion is seriously damaging their quality of life that they can afford abroad.

While some expats are do benefit from HM Revenue and Custom’s qualifying recognised overseas pension schemes (QROPS) and the ability to secure funds in various currencies, others have faced fiscal pressure as a result of the fact that their pensions income is fixed in sterling and suffered from adverse currency fluctuations.

Commenting on the research findings, Keith Boughton, director of Equiniti Paymaster said; “Ten years ago the value of Sterling was significantly higher than it is today, and those emigrating abroad for their retirement enjoyed considerable value from their pension.

“A plummeting pound has left many expat pensioners unable to make ends meet and struggling to find other ways to protect the value of their pensions.”

Equiniti cite the case of British expats living in Australia as an example. The current strength of the Australian dollar combined with the weakness of the pound has entailed that expats who have retired down under have lost almost 50% of their purchasing power. Individuals who retired in Australia 10 years ago would have benefitted from a favourable exchange rate in which they were able to swap £5,600 for $13,625 AUD. However, today they would secure only $7,253 AUD if they exchanged the same amount, representing a significant loss in the value of their pension.

Individuals who are looking to retire overseas need to ensure that they seek specialist financial advice on how to manage their pension funds while living abroad.