British pensioners living abroad could be wasting millions

British citizens living abroad could be wasting over £300 million a year when simply claiming their state pensions, due to unnecessary bank charges and fluctuating exchange rates, according to HIFX, the foreign exchange broker.

Over a million pensioners are now living abroad and claiming their pensions from the UK, and this figure has been growing steadily over the last few years. In September 1997, there were 770,000 retirees claiming their pensions from abroad and in March 2003 this figure had grown to 932,000. The most recent figure now stands at 1,038,600.

However, each month that the average retiree living abroad claims their pension through their bank they are charged anything between £10 and £30. On top of this many overseas banks charge average receiving charges of 0.5% of the total value of the monthly pension. This means in a typical year pensioners living abroad are paying over £300 in bank charges and fees just to be able to spend their government pension abroad. Added to this, anyone who holds a private or company pension in the UK and wants to receive an income from it whilst abroad will have to pay the same charges for each payment received, which means eating into those hard earned savings.

Furthermore, any pension payments which retirees are being paid from the UK are subject to fluctuating exchange rates meaning the value of their pension can go up and down continually throughout the year. The 37,240 retirees living in South Africa are some of the most exposed as the South African Rand (ZAR) is one of the world’s most volatile currencies .

For example, a retired couple claiming a state pension allowance of £730.16 a month from the UK would have received ZAR 10,981 in October 2006 but only ZAR 9,779 in November. So although the amount being paid out in pounds remains the same, in just one month, the amount received was ZAR 1,202 less.

In the broader scheme of things, now represents an excellent opportunity to be locking in your rate for the next twelve months. During February 2006 GBP/ZAR was trading around 10.4000 however at the time of writing, Sterling is trading around 35% higher against the Rand at 14.1000.

HIFX runs a regular payment service to enable British people who have emigrated or bought property abroad to manage their currency payments – such as pensions, salaries and mortgage transfers. HIFX do not charge their customers to send money overseas through their regular payments plan and also eliminate all receiving charges. The plan also protects people against currency fluctuations, by fixing exchange rates for between six and twenty four months.

Mark Bodega, Marketing Director at HIFXcomments: “With over a million retirees living abroad and claiming their state pensions from the UK, this equates to a lot of money being paid in fees and unnecessary bank charges and millions exposed to foreign currency fluctuations every month. HIFX’s regular payment service means retirees no longer have to pay expensive bank charges when making regular payments overseas. The plan also means retirees know they will be receiving the same amount of income every month, which means they can budget and save themselves the worry of currency fluctuations eating into their pension.”

“Everything is done via direct debit and means the customer doesn’t even have to speak to their foreign or UK bank, therefore saving again on high call rates. HIFX arranges everything on their behalf and gives retirees living abroad real peace of mind.”