Expat pension pots suffer from plummeting pound

Published:  9 Apr at 6 PM
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The weakened state of the pound sterling has devastated many expats relying on their pensions for their day-to-day living expenses.

Recent research has revealed that British pensioners living on their retirement pensions in many overseas countries have seen their purchasing power drop by 50 per cent or more. Pensioners living in the Eurozone have endured falls of 22 per cent, with a sterling pension of £5,000 worth some €7,300 in 2003 now worth just €5,692.

British retirees in Australia are the worst affected, with a 47 per cent drop in a £5,000 pension from AUS$ 13,625 to AUS$ 7,253. In addition, British state pensions are frozen at the payment level current when emigration occurred.

To make matters worse, those with income from savings used for propping up their declining pension amounts are being even harder hit with the recent unprecedented fall in interest rates paid on term deposits in offshore banks. If savings are kept in UK banks, the news is even worse, as interest rates are not expected to rise for their record lows any time soon.

According to Equiniti Paymaster’s director, Keith Boughton, pensioners who retired overseas some ten years ago based on an occupational and state pension were able to live comfortably in many popular countries as sterling was trading at favourable rates. Nowadays, he added, many are struggling to make ends meet and find ways to protect the value of their pensions.
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