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Pension incomes abroad slashed by weak pound

20 October 2009 / by Andy Davies

British pensioners living abroad have not escaped the effects of the recession according to HiFX, who claim the average pension income for Brits living in Europe has fallen by around £250 since January 2007.

With more than one million Brits currently living abroad and claiming state pensions, the foreign exchange specialists say that the ongoing effects of a weak pound has led to more than £5million being potentially lost on their income in the last two years.

It appears that pensioners living in Australia and New Zealand have been some of the worst hit with the value of their state pension being slashed by market volatility.

Brits living down under in Australia have lost more than AUS$150 – the equivalent to around £85, in the past three months – based on a typical state pension of £628, while pensioners in New Zealand, have seen their income cut by around NZ$226 (approximately £103) in the same period.

Meanwhile, retirees living in Europe and the United States have also been hit, as their pension income has been reduced by approximately £56 and £34 in the past four months.

Commenting, Mark Bodega, director at HiFX, said: "In the current economic slowdown everyone is feeling the pinch. However Brits living in Europe and receiving a fixed income in Sterling are being hit particularly hard. In the last two years we have seen unprecedented volatility in the currency markets with the value of the Sterling fluctuating by over 30 per cent against the Euro."

In addition to a weakening pound affecting pension incomes abroad, HiFX claims that the average pension living abroad spends up to £300 a year in bank charges to able to spend their pension abroad.

To help pensioners combat these charges, Mr Bodega added: "With further falls in the value of sterling predicted, any pensioners who cannot afford to see the value of their pension incomes decrease any further should consider using one of the Regular Payments Abroad services offered by many currency specialists in the UK."

© Fair Investment Company Ltd