UK pensioners in Cyprus are facing a major challenge to survive, after the UK government decided to stop paying pensions into banks in Cyprus. Many are pooling resources or living off charitable donations.
So how could this happen?
Banks closedThe situation for everyone in Cyprus is difficult. The banks have been closed for two weeks - and will open tomorrow. Even then there are likely to be restrictions on how much money can be transferred or withdrawn.
In the interim, ATMs have been operating, but banks have limited the maximum sums people can withdraw - in order to prevent a run on the banks. The two main banks in the country set the daily limit at 100 euros. It has lead to a number of demonstrations and long queues at ATMs around the country.
PensionersHowever, for UK pensioners, the problem has been compounded by the fact that the government has suspended payments to Cyprus bank accounts, based on concerns over what would happen to deposits in Cyprus banks. As we reported yesterday, payments will not resume when banks in Cyprus reopen.
Those who have UK bank accounts have been able to redirect their pension payments into those and get hold of the money that way. However, around two thirds of UK pensioners in Cyprus have no UK accounts.
However, those who slip through the cracks have nothing. The BBC has reported that many have turned to charity, and that churches have been handing out food.
SolutionsThe Department of Work and Pensions says there are solutions, and they have been trying to contact people who have been hit by the freeze. They say money can be paid into the account of a UK friend or relative, or individuals can set up a new UK bank account through an emergency service the Treasury has arranged with Barclays.
Pensions Minister Steve Webb said in a written statement to Parliament: "We are advising customers to change the bank account into which payments are made, for example by nominating an alternative bank account or the account of a trusted friend. This is a practical measure to ensure that payments reach our customers promptly, and we are not advising these customers to close their Cypriot bank accounts."
However, pensioners told the BBC they were unconvinced that this would help, as the woes of the banking sector in Cyprus mean that most businesses are only accepting cash.