Pension incomes fall 20% for Brits abroad as pound falls

05 November 2008 / by Rebecca Sargent
More than a million British pensioners living abroad will have seen an average monthly pension income fall of around €200 in the last 21 months as sterling has dropped by 20 per cent against the Euro.

The news from foreign currency exchange specialists HiFX means that, should the Pound continue to fall to €1.15, Brits abroad could see their pension income fall by a further €750 over the next year.



And, in the current financial climate, anything is possible; according to HiFX in October this year the average couple's monthly pension of £628 was worth anything between €766 and €816 due to volatility in the markets.

Commenting on the potential downfall facing pensioners abroad, director at HiFX, Mark Bodega 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 month we have seen unprecedented volatility in the currency markets with the value of the Sterling fluctuating by over 6% against the Euro, the largest monthly range (in percentage terms) since May 2000."

Nevertheless, there is the option of transferring a pension fund with a fixed exchange rate, Mr Bodega added: "Any pensioners who have not set up a regular payments abroad system to transfer their pension income at a fixed exchange rate each month can not fail to have noticed they are receiving less."

In addition to losing out as a result of exchange rates, pensioners drawing their money abroad could be wasting £300 each year through bank charges. Mr Bodega concluded:

"With over a million retirees living abroad and claiming their state pensions from the UK, this equates to millions being exposed to foreign currency fluctuations every month, plus a lot of money being paid in transfer fees and unnecessary bank charges."

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