Brits abroad reject local currencies for pension payments

28 April 2014

UK pensioners abroad prefer sterling as overseas pension payments fall in last five years

Latest research from Paymaster International Payments, part of the Equiniti Group, and based on an analysis of over 1 million pensioners shows a 2.4% drop in pensioners  retiring overseas choosing to receive their UK pension in their local currency. The analysis would indicate that around 12,000 fewer UK pensioners are now opting to receive their pension in overseas local currencies compared to five years ago.

 

The fall in pensioners receiving local currency payments overseas correlates directly with the post 2007 fall in the value of the pound against most international currencies.

Purchasing power of the pound:

Currency % ex-pat pensioners receiving currency £5000 pension purchasing power % change in buying power of Sterling
March 2014 March 2007
Eurozone 12.45% 1.2069 1.4723 -18%
Australian Dollar 9.83% 1.8024 2.4288 -26%
US Dollar 9.13% 1.6640 1.9690 -15%
Canadian Dollar 8.28% 1.8373 2.2694 -19%
New Zealand Dollar 7.61% 1.9241 2.7510 -30%
South African Rand 5.85% 17.5736 14.3670 +22%

(Source: Equiniti)

Andy Brown, operations director at Paymaster International Payments, commented: “The last five years have reversed the trend for people choosing to receive their UK pension payments in overseas currency. This is unsurprising as many people will have seen the spending power of their pension fall significantly, and anyone with some spare cash is likely to prefer to aggregate funds in the UK with the hope that the Pound might increase in value in the future. As the Pound is showing signs of recovery against most currencies, we would expect more people to choose the local currency payment option and the number of pensioners abroad to increase. Attracted by the significant falls in property prices in the most popular destinations making retiring abroad much more desirable and affordable.”