Those who have already retired abroad away from the UK have lost out to the tune of billions just from currency fluctuations over the past two years, and even greater numbers of British retirees are losing up to 40% a year on what they should be receiving from their annuity.
Retired Brits abroad are being charged monthly for international transfers of their pension income as well, and all in all, Brits who should be living the dream abroad in retirement are being ripped off left right and centre. Are you in the same boat?
In this report we’re going to highlight the financial pitfalls that you need to be aware of when you’re planning on retiring abroad, and we’re going to show you how you can retire abroad but not lose out on your pension income. If you’re also thinking about going to work overseas before your retirement, there are ways that you can further enhance your future pension gains through the utilisation of far more attractive offshore savings vehicles than a traditional pension.
It’s estimated that over the past 2 years alone, Britons who are living abroad and claiming a regular income in the form of a pension payout have lost up to 5 billion pounds because of the pound’s dramatic and catastrophic collapse in the face of other currencies such as the euro and the dollar.
In perhaps more tangible terms what this translates to for those who are living abroad and earning their income in pounds from the UK is that they are suffering month in, month out – and have seen the value of their pension income simply eroded. Just in the last 3 months alone, Brits living in New Zealand and receiving the state pension from UK have lost £100 a month because of the pound’s decline, those in America have lost £34.18 a month, and those living in the Eurozone have lost £50.72. (Figures from HiFX)
On top of this erosion by fluctuations in the pound’s fortune is the very real fact that those who receive their pension into their British bank account and then either withdraw it overseas via an ATM, or who transfer it to their international account are charged excessively by their British bank to the tune of up to £30 a month per transfer. This also has a serious erosion effect as you can imagine.
Then when you lump all of this devastating data on top of the news that most pensioners in the UK fail to make the most of their income from their annuity because they are not informed about the open market option they have to shop around for their annuity pay outs, you begin to understand the hurdles that those who want to retire abroad face. Affordability is simply eroded…and this can make the difference between being able to live out your dream of retirement abroad, or not.
If you’re approaching retirement and considering your options of retiring abroad, speak to currency exchange specialists about fixing the rate of exchange on regular transfers overseas, speak to them about the charges they will make. Look at what’s called the ‘open market option’ when it comes to cashing in your pension via an annuity – and realise that you could be losing out by as much as 40% annually in a loss of income if you don’t.
Finally, if you’re a way off retirement and you’re thinking of working abroad or you’re certain that you will retire abroad, look at the offshore saving and investing alternatives that are available to you for your pension savings. For example, the British government back QROPS (qualifying recognised overseas pension scheme) is potentially an ideal solution for those who do not want to be restricted by an annuity when they retire.
Start looking into your financial options as early as you can ahead of any decision to retire abroad and you will be doing the best you can to protect your future income…
