UK Pensioners Overseas Pay Price For Global Turmoil

24 November 2020
  • Sterling has fallen 40% against the Swiss Franc since Lehman Brothers folded on 15 September 2008
  • The Pound is down 17% against the Euro since David Cameron’s General Election victory on 7 May 2015 guaranteed the Brexit referendum
  • The ONS estimates there are more than 203,000 British citizens aged over 65 residing in the EU who may be facing shrinking budgets

New data reveals those who retired abroad have seen spending power decrease by up to 40% since 2008, thanks to currency fluctuations. The analysis comes from EQ, an international technology-led services and payments specialist, which manages the overseas payments of over 60,000 UK pensions.

Since 2008, falls in Sterling have left pensioners living on fixed incomes facing shrinking budgets, and the dream retirement abroad has become less affordable for many. Currency rates have been influenced by several global factors during the period, including: the 2008 financial crash, the UK leaving the EU, global trade wars and now Coronavirus.

Switzerland has seen the most significant currency movements against Sterling, which has plummeted 40% against the Swiss Franc since Lehman Brothers folded on 15 September 2008.

Brexit has also damaged Sterling. The Pound is down 17% against the Euro since David Cameron’s General Election victory on 7 May 2015 guaranteed the Brexit referendum, which took place the following June.

Perhaps surprisingly, Britain’s ongoing struggle with COVID-19 has not had a negative impact on overseas pensioner incomes. Since the national lockdown announced on 23 March 2020 only those living in Australia and New Zealand have seen falls, of 10% and 5% respectively.  

EQ supports around thirteen million pension scheme members, 27,000 of which are paid in Euros. The ONS estimates1 there are more than 203,000 British citizens aged over 65 residing in the EU who may be experiencing similar issues.

Currency performance vs Sterling – at 12 November 2020:

 

AUD

CND

EUR

USD

THB

SFR

ZAR

NZD

Lehman collapse: 15 Sept 2008

-18%

-10%

-11%

-26%

-35%

-40%

43%

-28%

GE 2015: 7 May 2015

-6%

-7%

-17%

-13%

-20%

-14%

14%

-3%

Brexit vote: 23 June 2016

-7%

-8%

-14%

-10%

-22%

-14%

-4%

-5%

Boris Johnson becomes PM: 23 July 2019

3%

5%

1%

6%

4%

-1%

20%

5%

COVID 19 Lockdown: 23 March 2020

-10%

1%

3%

13%

5%

6%

3%

-5%

  
Duncan Watson
, CEO of EQ’s pension business EQ Paymaster, commented:

“The dream to retire overseas, for whatever reason, will have been motivating pension savers for many years. However, these figures show that resilience to currency fluctuations should be a key part of any financial planning for those living on fixed incomes, like an annuity.

“Improvements in technology are making pension saving and financial planning more accessible for retirees, and we are constantly working with pension schemes and employers to ensure their pension savers have a good understanding of what their retirement will look like. Planning a retirement starts with pension saving but improved engagement and the right advice at the point of retirement could be vital to ensuring that those savings can provide the lifestyle expected.”
  

ENDS

For more information:

Research

1 - Estimates of the number of British citizens living in the EU, by country, 2018

Tulchan Communications

Martin Robinson
Tel: +44(0)20 7353 4200
Email: Equiniti@tulchangroup.com

Notes to Editor:

About EQ (Equiniti Group plc)

EQ is an international technology-led services and payments specialist. With over 5,000 employees, it supports 36 million people in 120 countries and serves c.70% of the FTSE 100. EQ’s purpose is to care for every customer and simplify every transaction, delivered with less of an impact on the environment.

EQ is listed on the London Stock Exchange as Equiniti Group plc.

Find out more https://equiniti.com/

EQ serves clients and customers through four divisions:

EQ Boardroom: Share registration, governance and investor relations advisory, and employee benefits services

EQ Digital: Helping regulated businesses and Government to manage customers through innovative digital solutions

EQ Paymaster: Pensions, annuities, flexible benefits and payroll for the UK’s largest public and private sector organisations

EQ U.S.: Transfer agency, equity compensation services and digital solutions for U.S. firms; serving the world's leading brands since 1929