A decade of a weakening pound has left many pensioners living abroad with up to 50 per cent less buying power from their retirement income now than when they first retired.
Statistics compiled by Equiniti, one of the UK’s largest pensions administrators which oversees work pension payments to more than 50,000 expats, show that those in the eurozone have lost 22 per cent of their buying power due to swings in currency markets while those in Australia have felt the greatest decline, at 47 per cent.
The study underlines the decline of the pound over the past decade and how, on a global level, it has reduced the wealth of Britons.
The policies of the Bank of England in recent years, in particular, have put pressure on sterling.
The Bank’s policy of ultra-low interest rates and electronic printing via quantitative easing have weighed heavily on the currency.
A weaker pound, the theory goes, helps make British exports more competitive and boosts the economy.
Many of the payments handled by Equiniti, which has compiled the figures for the top ten most popular expat destinations, are for former public sector workers who, it said, receive an average pension of around £5,600 a year.
The largest proportion of these – 12.5 per cent of the 50,000 pensioners – has retired to the eurozone. Someone who retired in 2003 with a £5,000 pension would bring in just under €7,300 ten years ago, while the same would now only buy €5,692.
In Australia, where the currency has strengthened largely due to a boom in natural resources prices of which the country is a major producer, the pension will only buy (AUS)$7,253 compared to (Aus)$13,625.
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But expat pensioners in South Africa and Jamaica have both seen an increase in the buying power of their pension.
Keith Boughton, director of Equiniti Paymaster, said; “Ten years ago the value of sterling was significantly higher than it is today, and those emigrating abroad for their retirement enjoyed considerable value from their pension.
“A plummeting pound has left many expat pensioners unable to make ends meet and struggling to find other ways to protect the value of their pensions.”