Expat pensioners cash in as pound value soars
by Alexander Beard, on Oct 15, 2014 2:20:59 PM
Retired British expats who choose to live in the Eurozone have seen the income from their basic State Pension rise by nearly 10 per cent in the past year according to new analysis by the Prudential. UK Pensioners living in the Eurozone now find their annual income from the basic State Pension at €7,344.44 – a rise of €661.24 since this time last year.
Prudential’s analysis shows that just over a quarter (26%) of the increase is a result of the rise in the basic State Pension to £113.10 a week from £110.15 a week in April 2014. However, the bulk of the gains seen by expat pensioners has come from the soaring value of the pound against the euro. The pound was worth €1.25 at the end of June compared with €1.17 at the same time last year. The value of the pound in relation to the euro is now back at the level last seen in November 2012 and substantially higher than the low of €1.14 experienced in March 2013.
Eurozone expat pensioners now receive 26% more in euros from their basic State Pension than they did five years ago – the equivalent of a pay rise of €1,530 a year.
Paul Fidell, investment expert at Prudential, said:
“The relative strength of the pound means that expat pensioners have effectively benefited from a pay rise over the last year. However, if they are totally or heavily reliant on the State Pension for their retirement income it is important not to fall into the trap of overestimating its buying power. Anyone considering retiring abroad should also be aware of the risks posed to their income by currency fluctuations and an unfamiliar tax regime. A consultation with a financial adviser or retirement specialist should help them to prepare a plan to deal with these risks.”