Startling new figures have emerged showing that numerous pensioners could be struggling to make ends meet, with some in their 90s possibly receiving a mere £1,896 annually from their state pension.
As many Brits eagerly anticipate the Autumn Statement, expecting Chancellor Rachel Reeves to unveil the extent of next April’s state pension increase, there are those grappling with payments that inflation has long since surpassed.
Experts suggest that frozen pensions could be affecting 40% of British retirees living overseas, regardless of if they’ve accrued enough qualifying years to be entitled to the full new state pension amount at £11,502 a year.
Fresh insights from Interactive Investor have revealed that the financial divide is growing between British expats and those residing at home.
A staggering count of over 450,000 pensioners could be missing out on nearly £4,900 compared to their UK counterparts—a significant 40% shortfall for British pensioners living abroad.
The discrepancy has alarmingly widened since last May, when it was reckoned to be around £2,300, according to Department for Work and Pensions’ data.
In response to these alarming new stats, Russell Gous, editor-in-chief of TopMoneyCompare, has issued a stark warning, suggesting such disparities may force Brits to adjust their retirement strategies.
He cautioned retirees to contemplate additional aspects that will play a role in their finances later in life if they move abroad, stating: “Exchange rate fluctuations can significantly affect the cost of relocating, with a weaker pound making the move considerably more expensive. A strong pound, on the other hand, could erode the value of their pension even further when converted into the local currency.
“Budgeting for potential currency fluctuations is key to safeguarding financial stability. Tools like locking in exchange rates through forward contracts can help protect against exchange rate volatility. With forward planning and a clear understanding of pension rules and exchange rates and transfer costs, retirees can better protect their income and enjoy a more secure retirement abroad.”
Interactive Investor’s research also revealed that British expats in their 90s with frozen pensions could be living on as little as £1,896 a year due to the absence of the triple lock promise and having their pensions frozen upon relocating, leaving them unable to keep pace with inflation. This issue is compounded for those who may have lower initial state pensions because of reduced National Insurance contributions from working overseas.
However, not all British retirees will face these challenges; it depends on whether their new country of residence has a social security agreement with the UK, such as those within the EEA, Gibraltar, and Switzerland.
Unfortunately, many Commonwealth countries, including Australia, Canada, South Africa, New Zealand, India, Pakistan, Bangladesh, numerous Caribbean islands, and all African countries, lack such agreements, resulting in frozen pensions for their British expat retirees.
