Expat Pension Pound Slumps 50% Less In 10 Years

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There’s more bad news for British expat pensioners as new research shows income has fallen by 50% in the past 10 years – and as if that wasn’t bad enough rising inflation is expected to push company pension funds deeper into the red.

The falling value of the pound has hit pension income by nearly 50% says international pensions payment firm Equiniti Paymaster.

They looked at how the currency fluctuations hit 50,000 pensioner expats and just about everyone has seen the value of their pension go down.

Most expat pensioners are living in the Eurozone, that’s around 12% of them, and a retiree who stopped working in March 2003 would have received a pension of 7,300 Euros.

However, that figure has now dropped to 5,692 Euros, a fall of 22%.

Only two countries saw rise

Expats who retired to Canada saw a 36% slump; those in New Zealand are now 38% poorer while those living in the US saw a small drop of 8%.

One of the biggest British expat communities is in Australia and those who retired there are the biggest losers with pensions dropping in value by 47%.

Two countries saw pension values increase in the past 10 years – Jamaica, which saw pensions rise by 66% as Sterling performed well against the island’s dollar while South African retirees saw a 6% rise.

Keith Boughton, a director at the firm, said: “Sterling was worth significantly more 10 years ago than now. Expats retiring abroad enjoyed good value from their pension.

“Now expat pensioners are struggling to safeguard their spending power and income as the plunging pound has left them with a financial hole to plug.”

To compound the worrying situation, the value of company pension schemes is set to drop considerably because of falling corporate bond yields and rising inflation – and this will impact what the pension firms will pay out in the coming months.

Company pensions hit

With inflation predicted to rise later this year, company pension schemes will be hit hard.

The pensions industry is expected to announce that the average fund deficit across the UK’s pension schemes will exceed £100 billion.

The figures have been compiled by Buck Consultants who say the industry shouldn’t panic since they are responding to accountancy rules which are not calculating future bond yield rises.

This, they say, will help improve the situation and that pension companies shouldn’t be over-reacting to the figures and use ‘common sense’ when calculating their future commitments.

Managing director Steven White said: “Pension scheme managers need to look to the improving global economy and better yield curves. Even the smallest movement in long-dated yields can deliver a massive change on the size of a fund.”

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