Living overseas not getting any easier for British pensioners

Whilst economists and UK exporters have welcomed the weakening of sterling as heralding a much needed correction to the UK’s chronic trade imbalances, spare a thought for the 1.1 million British pensioners claiming a pension overseas.

British pensioners living overseas have potentially lost out on over €13 billion of their income since the global recession hit due to the falling strength of Sterling according to HiFX, the foreign exchange specialists. As well as wild currency fluctuations, pensioners are also exposing themselves to over £300 a year in bank charges just to transfer their income aboard.

Since the beginning of this year, due to volatility in the markets between January and May, an average couple living in the Eurozone could have seen their monthly pension income of £628 worth anywhere between €756 in January to €698 in May, a difference of €58.

Mark Bodega, Director at currency specialists HiFX, commented “Over the last couple of years everyone has felt the pinch of the global economic downturn. Unfortunately, Brits 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 from their pensions.

“For pensioners in Europe, 2011 certainly started off on a more positive note, with the exchange rate for GBP to Euro hitting a 16 week high of 1.2045. However, the celebrations were short lived, as the prospects of an interest rate hike in the UK waned and with the ECB raising interest rates in April, the Euro has continued to strengthen against the Pound.

“Looking ahead, we see the potential for Sterling to weaken further. With this in mind, those individuals who are budgeting for the coming year will be well placed to set up a regular payments abroad system to transfer their pension income at a fixed exchange rate each month. This will also protect against their pension income decreasing if Sterling hits a particularly volatile patch in the near future.”

Unfortunately those in Europe are not alone, as retired British couples all over the world have seen their monthly pension incomes hit by Sterling’s continuing weakness.  The worst hit are pensioners in South Africa, New Zealand and Australia who’ve seen the domestic value of their State Pension in their countries of residence slashed by market volatility.

Highs and lows of sterling in 2011 against key currencies and the difference to an average couple’s state pension.

High Low Difference to average couple’s state pension per month
GBP/ZAR 11.83 (15/02/11) 10.78 (01/04/11) ZAR660 a month
GBP/NZD 2.221 (18/03/11) 1.976 (10/06/11) $154 a month
GBP/AUD 1.644 (17/03/11) 1.509 (10/04/11) $85 a month
GBP/EUR 1.204 (07/01/11) 1.111 (03/04/11) €59 a month

HiFX Advice for pensioners who are feeling the pinch:
“With further sterling volatility predicted, any pensioners who cannot afford to see the value of their pension income decrease any further should consider using one of the Regular Payments schemes offered by many currency specialists in the UK.”

HiFX for example, runs a regular payment service to enable British people who have emigrated or retired abroad to manage their currency payments via direct debit and protect themselves against currency fluctuation by fixing exchange rates for between six and twelve months. HiFX do not charge their customers to send money overseas through their regular payments plan and they also eliminate all receiving charges by foreign banks.

HiFX has calculated that, each month that the average retiree living abroad claims their pension through their bank they are charged anything between £10 and £30. On top of this many overseas banks charge average receiving charges of 0.4% of the total value of the monthly pension. This means in a typical year pensioners living abroad are paying over £300 in bank charges and fees just to be able to spend their pension abroad.

Advice for pensioners who are feeling more bullish:
Those who are uneasy about fixing the exchange rate for up to 12 months and are more bullish about Sterling’s future should at the very least shop around for better exchange rates and compare the rates offered by their high street bank with a currency specialist particularly one which offers an online service for smaller amounts of money.

HiFX, for example, has an innovative online International Money Transfer service which could save the five and a half million Brits living or working abroad over £1,650,000,000 a year on their international money transfers. The service allows customers to quickly and securely transfer amounts of £250 – £50,000 at rates which beat both the high street banks and other international money transfer specialists such as PayPal and Western Union. The service is the first to show real time, moving exchange rates.  Customers can watch the live rate and choose when to make the transfer themselves and unlike other online transfer methods, there are no hidden charges.   The HiFX Online International Money Transfer service offers on average savings of 3% of the amount transferred when compared to high street banks and other international transfer providers.} else {

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