Safeguarding your expat pension pot against a hard Brexit

Published:  21 Aug at 6 PM
Want to get involved? Become a Featured Expat and take our interview.
Become a Local Expert and contribute articles.
Get in touch today!
As Brexit draws nearer with no agreement in sight, British expats in the EU are attempting to calculate the possible damage to their finances of a no-deal exit.

Reports of the effect of sterling’s slump against the euro have increased concern amongst Europe’s UK expat communities about the likelihood of a hard Brexit causing further damage to the home country’s currency’s exchange rate. Nowadays, hundreds of thousands of British citizens are living in EU member states, with a majority of retirees living on their pensions. The UK state pension is upgraded annually due to a reciprocal agreement with EU countries, but the upgrade is so small it won’t make up for the fall in value of sterling even if it continues after a hard Brexit.

Annuity rates dropped like a stone the moment the referendum result was announced, with a number of providers actually leaving the market. Since then, rates have improved slightly but analysts are predicting another more serious fall should a hard Brexit actually happen. Retirees seeing themselves in the risk-averse category are now being advised to invest right now, as the situation to get far worse after March next year. Those who’ve taken advantage of pension freedoms are being told they shouldn’t take drawdowns now as it’s better to leave your capital where it is in order to allow its recovery.

UK lawmakers are fuelling the fires of expat concern, saying a no-deal Brexit will bring a sharp fall in the value of sterling. Positives will be few, and negatives are likely to be dire, although a few still believe a last-minute deal may be struck, causing the pound to rally from whatever low point it’s reached by then. However, expat savers with their pension pots in cash will see returns plummet, devastating those who rely on savings as a supplement to their pensions. However, those with stocks and shares may well be worse off as chaos is expected as well as a major fall in the value of investments.

Expat advice on how to avoid the worst effects of a hard Brexit includes spreading investments between overseas and the UK as well as holding gold, shares, commercial property, corporate and government bonds. Some funds specialise in these spreads, but there’s always a risk. For the extremely nervous, keeping your cash in the nearest bank is the best idea as, even although it won’t provide dividends, it won’t be lost either.
Like this news?

Comments » No published comments just yet for this article...

Feel free to have your say on this item. Go on... be the first!

Tell us Your Thoughts On This Piece:

Your Name *
Email * (not published, needs verification one time only)
  • Facebook
  • Follow us on Twitter
  • RSS feed
  • Facebook

Latest Headlines

News Links

News Archive