British pensioners abroad lose £3 billion since 2007

British pensioners abroad lose £3 billion since 2007

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.

Retirement destination

Currency conversion

Exchange rate high (July 2007)

Exchange rate low (July 2015)

Difference to State Pension income per month

South Africa





Germany/Ireland/Italy/ Spain/Cyprus/Netherlands/France/Portugal















New Zealand










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.

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.

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British pensioners abroad lose £3 billion since 2007

Pension experts at Mercer have identified the countries with the best pension systems. At number 10 is Singapore.

The system is based on the Central Provident Fund, which covers everyone in a job. Some of the cash can be withdrawn during your working life, and a prescribed minimum drawn down at retirement as an income.

Overall, Singapore scored 65.9 out of 100. It fared well on sustainability measures, and integrity, but relatively low incomes in retirement dragged its combined score down.

The UK scored 67.6 out of 100. The system was ruled to have great integrity, and good incomes in retirement. The overall scores were also up from the year earlier, as auto-enrolment was rolled out further, bringing more people into workplace schemes.

The researchers, however, were worried about how sustainable the system would be in the future. They called for an increase in minimum pensions, and added that more people ought to be encouraged into workplace schemes and persuaded to contribute more to their pension. They also wanted to see more people saving privately for their pension, and working later in life.

In Chile the state offers means-tested assistance, a mandatory centralised pension for employees to contribute to, and there are voluntary employer schemes.

Chile score 68.2 out of 100. Its highest score was for integrity, with another good mark for sustainability. Relatively low incomes in retirement let it down, and the researchers said the biggest improvements would come from raising the contribution levels.

Canada has a universal flat-rate pension - with a means-tested supplement. There’s an earnings-related pension based on lifetime earnings, plus voluntary workplace and private schemes.

It scored 69.1 out of 100. Its best score was for incomes in retirement, while it also performed well for integrity. Its only relative weak point was how sustainable it might be for the future - particularly because older people don't tend to stay in work.

Sweden has an earnings-related system with notional accounts - although this system was introduced in 1999 so it’s still in transition from a pay-as-you go system to a funded one. There’s also a means-tested top up.

Sweden was given 73.4 out of 100. It scored excellently for integrity, and well for sustainability. The overall score was brought down by incomes in retirement, and the researchers called for more workplace and private pensions.

Switzerland has an earnings-related public pension, a mandatory occupational system and voluntary private pensions.

It scored 73.9 out of 100. It fared well for integrity and reasonably well for incomes in retirement. The researchers just questioned its sustainability.

Finland has a means-tested basic state pension and a range of statutory earnings-related schemes. It scored 74.3 out of 100.

It had high integrity scores, with a less positive result for incomes in retirement, and a surprisingly low score for sustainability. The researchers called for higher minimum pensions, higher mandatory contributions and encouraging people to work longer to improve sustainability.

The Netherlands has a flat-rate public pension and quasi-mandatory earnings-related occupational schemes - which are industry-wide defined benefit schemes based on lifetime average earnings.

The system scored 79.2 out of 100. All its scores were high - particularly for the integrity of the system.

The system in Australia consists of a government scheme, a mandatory employer contribution into a pension, and additional voluntary contributions from individuals.

It benefits from the fact that all workers have been automatically enrolled in their company pension schemes for some time, so participation rates are high. The minimum contributions have also been raised recently, which means workers are building reasonable retirement incomes. It had an overall score of 79.9 out of 100, with the only question mark being over sustainability.

Denmark’s system includes a basic state pension, means-tested state top-ups, a fully funded defined contribution scheme and mandatory occupational schemes.

The researchers said it was "A first class and robust retirement income system". It scored 82.4 out of 100, with high marks across the board.


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