Falling pound will hit expat pensioners
THE lure of better weather and living conditions has tempted many British pensioners to retire overseas. It is estimated there are 1.1million British expat pensioners globally, with roughly 400,000 of them living in the eurozone.
Despite the fact that they were unable to vote in the referendum, the impact of Brexit on them is considerable.
James Stanton,n, of De Vere Group, which specialises in advice ce to expatriates, says: ays: ‘For UK pensiononers living g abroad, the plummeting pounds means they will receive considerably less each month in the local currency, making their cost of living g higher.’
Those who get the top rate of f the State pension risk losing €1,000 (£817) 7) a year as sterling falls. They could see their €7,215 a year pension shrink to €6,185, according to foreign exchange specialist HiFX.
Andy Scott, the company’s economist, says: ‘Elsewhere, the quarter of a million Brits who have retired to Australia could see the value of their pensions decrease by more than A$1,600 (£874) annually and those in America could see losses totalling in excess of $1,400 (£1,028) a year. ‘Globally, UK pensioners living abroad could face a collective loss of a £9.5billion a year.’ Pensioners living overseas need to watch exchan exchange rates closely. If you use a currency broker, c consider asking them to track the rate and set a target w when they will a automatically buy currency for you. There are two ways to cope with volatile currency markets. Either set up a forward c contract, where yo you can fix a rate by paying 5 to 10 per cent of the amoun amount to be exchanged today, w with the balance paid on the d date you set when agreeing the contract. Alternatively, set up a regular monthly contract, which allows you to fix the exchange rate at an agreed rate for up to two years ahead. The money will then be sent automatically via direct debit into your local bank account every month. Scott adds: ‘In this way, you will know exactly how much is being transferred every month. This should help pensioners endure the most turbulent currency fluctuations in the immediate aftermath of Brexit.’
As well as the State pension, investment income coming from the UK and private or company pensions will all potentially suffer from currency movements.