Beating currency movements can boost expat pension power

Published:  30 Oct at 6 PM
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Retiring overseas on a pension from the home country can be a daunting business due to the effect of currency fluctuations on a fixed monthly amount.

Most pensions need to be paid into bank accounts in retirees’ new countries of residence, leaving the recipients open to the vagaries of currency fluctuations as well as excessive inter-bank charges. Savings invested in home country accounts give little help as rates are at an all-time low and not expected to increase in the near future.

British expats living in Eurozone states have seen fluctuations in their incomes of 10 percent during the last 12 months, wiping out the miserly £2.70 per week increase granted in the 2013 budget. The movement of sterling against the euro is the cause, with the pound dropping from €1.25 last November to €1.18 in October.

The difference in income between the exchange rates for expat retirees on UK state pensions could amount to a devastating loss of €634 per year. Above-average rates of inflation in many favourite expat retirement destinations is causing hardship, and pensioners in the colder northern regions of Spain and France are about lose their winter fuel allowances.

Online advice on expat media pages often encourages those with savings to consult a local, trusted financial advisor, particularly if a private pension is also being received. Would-be expats could be forgiven for just stowing their cash in a safe of under the bed due to the recent adverse reports of unqualified overseas FAs and huge losses due to mis-selling.

For many, fixed rate accounts in secure banks in the retirement country are the best way to get at least 2.5 to 3.5 per cent on savings, a decided advance on the ridiculously low UK rates. Checking online as to which bank in the chosen country is reasonably safe and choosing the right time and method to move your money can at least ensure some support to your pension.
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