Falling pound hitting expat pensioners even harder

Inflation: Victoria Scholar discusses rise in interest rates

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The falling pound is making the cost of living crisis even worse for UK expat pensioners who rely on their fixed income. Analysis by the global financial services firm Ebury, found pensioners who have migrated for their retirement have seen the purchasing power of their pension fall over the last seven years. Following significant gains posted by the US dollar in 2022, pensioners being paid in US dollars would now be around 27 percent worse off.

Pensioners being paid their pensions in the Eurozone have seen a reduction of around 17 percent since 2015.

Those who retired to Australia or New Zealand have also seen their purchasing power drop by at least 20 percent.

The financial services firm stated this is even before inflation is factored in.

Currently, inflation in the UK is nearly 10 percent, the US is seeing an inflation rate of around eight percent, and across Europe, inflation sits at around nine percent.

Ebury said the cause of the drop in spending power was due to the “significant political and economic volatility” in the UK over the last seven years.

The firm stated that it began with the uncertainties of Brexit back in 2015-16 and was pushed harder with the effects of the COVID-19 pandemic.

Personal or workplace pensions can be paid to a person wherever they live across the world and people are entitled to any built-in annual increases in the same way as if they were living in the UK.

People are also able to claim state pensions when they retire abroad however, some of those who claim are also squeezed by frozen state pension rates which do not benefit from the triple lock or any incremental increase, due to the country in which they live.

Owain Walters, managing director of Ebury Mass Payments explained the data demonstrated the “need” for pension schemes and administrators to ensure they are taking “every step to mitigate the impact of unfavourable trends” in the pound’s value for overseas pensioners.

He said: “Expat pensioners have long been vulnerable to movements in currency markets.

“Unfortunately, for those moving away from the UK for their dream retirement abroad, the drop in the value of the pound on the back of the recent political and economic turmoil will significantly decrease their living standards.

“Strong communication from schemes and employers around the financial dangers and impact of retiring abroad is a necessary first step.”

Mr Walters explained that this was “particularly relevant” as the headline exchange rate many pensioners assume they can access is not always an accurate indication of the total cost of making these international payments.

He added: “Administrators and pension funds must also ensure they are delivering a best-in-class service for all of their members, including those living overseas.

“This involves ensuring that they are receiving the very best available FX rates, minimising fees and bank deductions and using technology to process payments in the most efficient way possible.”

This year the pound has been gradually falling in value however the pound plunged to a record low against the dollar on Monday, by as much as 4.7 percent to $1.035.


The drop came after Chancellor Kwasi Kwarteng unveiled his mini-budget of tax cuts last week.

As the UK relies on imports, the UK remains vulnerable to the inconsistency of exchange rates.

As the cost of imports increases, the cost of UK goods becomes more expensive to purchase which pushes inflation up even higher and erodes the buying a person’s buying power.

When this happens, anyone who relies on a fixed income, in particular pensioners, will be hit hard as inflation eats up the purchasing power of their income, which effectively makes them poorer.


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