British pensioners lose £3 billion by living abroad

State Pension income hit by Sterling struggles in retirement hotspots.

British pensioners that live overseas and claim the UK State Pension have potentially lost out on £3 billion of their income since 2007.

That’s according to new research from HiFX, a foreign currency exchange specialist, which says Sterling falling against currencies in popular retirement destinations is to blame.

Over one million UK pensioners live abroad and claim the £110.15 a week (£440.60 monthly) State Pension, but transferring the money between currencies impacts the value of what they end up getting.

UK State Pension abroad

HIFX’s research looked at 13 countries where the majority of expat pensioners pick to live and claim the UK State Pension.

The hotspots included Eurozone areas of Germany, Ireland, Italy, Spain, Cyprus, Netherlands, France and Portugal as well as South Africa, Canada, Australia, New Zealand and Switzerland.

Here are how the countries stacked up when converting the UK State Pension monthly income into the corresponding currencies in July 2007 and July 2015.

Source: HiFX

Expat pensioners claiming the monthly income of £440.60 and living in popular destinations in the Eurozone would have seen the amount they get plummet from €660.37 in July 2007 to €609.74 in July 2015, a difference of €50.63.

However, British pensioners retiring in Switzerland were the worst off, following a recent decision by the central bank to unpeg the Swiss Franc from the Euro. Those living in the notoriously expensive country have seen a 40% drop in the Franc against Sterling.

South Africa is the only country to have bucked the trend as retirees here actually got more for their money.

Compare the cost of different international money transfer providers

How to avoid losing out and boost income

Pensioners worried about the value of their income can use a 'Regular Payments' scheme, available from many money transfer brokers, and opt to fix their exchange rate for between six and 12 months to help protect against currency fluctuations.

If you are more optimistic about Sterling’s future and uneasy about fixing your rate for such a long period, you should shop around and compare the rates offered by high street banks with a currency specialist. 

Read How to save money on international money transfers.

Compare the cost of different international money transfer providers

More on foreign currency:

Foreign currency ‘buy back rates’

How to save money on international money transfers

The most popular reasons for sending money abroad