LONDON – The spending power of British expat pensioners and their state and personal pensions has dipped by a fifth in the past two years, claims research by pension administrator Equiniti.
And although expats in the Eurozone have suffered the worst financially, few British retirees around the world have avoided the devaluation of their pensions.
Not only is the plunging Pound affecting how much they must spend as exchange rate gaps grow between major foreign currencies and Sterling, but inflation is also making goods and services more expensive.
Eurozone inflation averages 1.5%, according to the latest official figures – although the rising cost of living in some countries is much more.
Currency exchange roller-coaster
Other popular destinations for British expats where exchange rates and inflation are eroding their spending power are Thailand, where pensions are worth 18% less than a year ago; South Africa, where expats have taken a 15% spending hit and in Australia, Canada and New Zealand, where the spending gap has widened to 14%.
“Expat pensioners are always at the behest of the currency exchange rollercoaster and the stumbling Brexit negotiations are not doing them any favours,”’ said Andy Brown, operations director at Equiniti.
“Anyone hoping to retire abroad will have had plans seriously derailed by the Brexit vote and the currency fluctuations. It is important to understand the implications of currency exchange rate movements on your budget.”
Despite the financial hardship faced by many expats, the British government refuses to step in and upgrade thousands of state pensions frozen at the initial payment because Britain has no agreement with most foreign governments to do so.
“This arrangement has existed for around 70 years and expats moving overseas should have known what would happen to their pensions before they left and planned their finances accordingly,” said a Department of Work and Pensions spokesman.
The DWP also confirmed the government has no plans to review or change the rules.
“Some payments remain frozen in time, staying at the same amount as when they first received their overseas pension. This leaves some to survive on as little as £30 per week and some are now receiving less than when their pension first started,” says the International Consortium of British Pensions.
Plunging Pound Saps Expat Pension Spending Power
By Lisa Smith – iexpats.com