May 18, 2014
British expats losing billions from their pensions
When people move abroad, they have a lot of issues to consider and finances are often foremost on their minds. Relocating to foreign shores can be daunting enough without the prospect of running into money worries. It is no surprise then that so many individuals take out expatriate health insurance to help protect their wellbeing and their bank balances when they up sticks.
Of course, there are other financial considerations for expats to bear in mind too. For example, British pensioners who move abroad need to ensure their retirement incomes will be secure.
According to research conducted by foreign currency exchange specialists HiFX, expats could be losing a lot of money because of the weak pound. The firm suggested that British expats who live abroad while claiming the UK state pension have potentially lost a collective total of more than £10.6 billion of their incomes since 2007 because of the weak pound.
It pointed out that those living in Europe had fared especially badly during this time, suggesting that a monthly pension income of £441 was worth €656 in April 2007, but had dropped to €510 by April of this year. This represented a fall of €145. Meanwhile, individuals living in Switzerland have been hit even harder. Whereas £1 in pension income bought 2.43 francs in 2007, it now gets 1.41 francs.
HiFX’s Mark Bodega remarked: “Pensioners in Switzerland have not only taken the biggest hit in terms of their state income, but Switzerland is also notoriously expensive and has high living costs. So pensioners hit will have been struck from both sides.”
He added: “The global economic downturn hasn’t settled down in any way. Unfortunately, Britons living abroad and receiving a fixed income in sterling have been hit particularly hard… and could not have failed to notice that they are now receiving less. Pensioners have been struck hard by the ongoing financial crisis, as well as importing and exporting volatility, which has had a dramatic impact on exchange rates.”
However, it is not all bad news for expats. In some countries, people are getting more for their pensions. For example, the South African rand has weakened against sterling, providing a financial boost to British pensioners who have moved to the nation.
According to HiFX, sterling will remain volatile and those who cannot afford to see their incomes devalued further should consider fixing their exchange rates using the regular payment services that are run by currency exchange firms.
As long as individuals are organised when they are planning their moves abroad, they should be able to minimise their exposure to financial risks. For instance, by securing international medical insurance, they can be certain that if and when they need medical assistance, they will not be left out of pocket. As well as helping to protect their finances, this can provide consumers with greater peace of mind. Increasingly, people are heading online to purchase cover of this kind. While on the web, individuals can also get stuck into research to help them prepare for their adventures overseas.