Brexit and the falling Pound is damaging the wealth of British expat pensioners around the world.
The spending power of their state and personal pensions has dipped by a fifth in the past two years, claims research by pension administrator Equiniti.
And although expats in the Eurozone have suffered the worst financially, few British retirees around the world have avoided the devaluation of their pensions.
Not only is the plunging Pound affecting how much they must spend as exchange rate gaps grow between major foreign currencies and Sterling, but inflation is also making goods and services more expensive.
Eurozone inflation averages 1.5%, according to the latest official figures – although the rising cost of living in some countries is much more.
Currency exchange rollercoaster
Other popular destinations for British expats where exchange rates and inflation are eroding their spending power are Thailand, where pensions are worth 18% less than a year ago; South Africa, where expats have taken a 15% spending hit and in Australia, Canada and New Zealand, where the spending gap has widened to 14%.
“Expat pensioners are always at the behest of the currency exchange rollercoaster and the stumbling Brexit negotiations are not doing them any favours,”’ said Andy Brown, operations director at Equiniti.
“Anyone hoping to retire abroad will have had plans seriously derailed by the Brexit vote and the currency fluctuations. It is important to understand the implications of currency exchange rate movements on your budget.”
Financial hardship
Despite the financial hardship faced by many expats, the British government refuses to step in and upgrade thousands of state pensions frozen at the initial payment because Britain has no agreement with most foreign governments to do so.
“This arrangement has existed for around 70 years and expats moving overseas should have known what would happen to their pensions before they left and planned their finances accordingly,” said a Department of Work and Pensions spokesman.
The DWP also confirmed the government has no plans to review or change the rules.
“Some payments remain frozen in time, staying at the same amount as when they first received their overseas pension. This leaves some to survive on as little as £30 per week and some are now receiving less than when their pension first started,” says the International Consortium of British Pensions.
The exchange rate has basically halved my pension to the extent I barely meet my mortgage and utility payments every month, so hence the saying an apple a day keeps the doctor away.
I am so disgusted with the British Government who bend over backwards not to discriminate against everybody except its own aged pensioners.
’twas ever thus. When I first received my unfairly frozen UK pension in 2003, the £ generated about A$2.70 it is now A$1.72, that’s 63% of the £’s previous value. Moreover, I was never advised by copious amounts of data supplied by DWP in 2001 that my UK pension would be frozen for my entire life. The International Consortium of British Pensioners are now working to have this issue resolved by seeking the UK’s suspension from the Commonwealth until this issue is resolved,
And many like me are still paying income tax in UK because their pensions are paid by UK sources, and getting nothing in return. It is estimated that by living abroad I save the UK Gov approx 7000 pounds per year, through non use of such things as NHS, etc. Add to that the nearly 3000 pounds I pay in income tax, and UK is doing well from me.
My pension from the UK has taken a big hit. When I first received same the ex rate was 2.44 cad to the pound. It stands at 1.65 now. That is a 33% drop in my purchasing power. Factor in the cost of living and you are approaching a 50% cut in purchasing power. Pensioners in non frozen areas including the UK are sheltered from these dramatic cuts.
I think it has to be recognised that the currency exchange rates affect all International financial transactions and not just pensions…and are certainly not responsible for the frozen pension scandal.
The article states that the UK refuses to uprate frozen pensions “because Britain has no agreement with most foreign countries to do so”. This is utter twaddle as it has nothing whatsoever to do with any foreign country, the policy is a domestic one and, in a Freedom of Information disclosure by the DWP in March 2013, confirmed that the UK can uprate unilaterally world wide. The fact that the policy has existed for over seventy years is an indictment of successive governments and parliament, not a matter to boast about and whether the pensioner knew of the policy before venturing abroad is totally irrelevant; it is the policy that is discriminatory and wrong, not the pensioner.
The discrimination is a disgrace and the government needs to feel the hurt that it is doing to lawful people who have paid NI and taxes throughout their working lives. It highlights that our MPs work for votes not for justice and fairness. Maybe we should set them this challenge.