Spending your twilight years on sunny foreign shores is a dream for many Britons, but it appears that working expats are not immune from the spending squeeze when they retire. The majority of those who have left the UK for work and are due to retire soon have admitted that their pension savings will not be enough to sustain the lifestyle they desire.
Research by Lloyds TSB International found that more than half of expats who are still working say they will have to reduce their spending substantially once they retire, with only 30 per cent of retired expats saying their pension is enough to maintain their standard of living.
Despite this, more expats think they are better off staying abroad rather than returning to the UK, with three-quarters believing that their cost of living where they live is lower than back home.
Emiko Caerlewy-Smith, associate director at Lloyds TSB International, said: 'A growing pension gap is a real worry for many expats, some of whom will have to significantly scale back the lifestyle they have been used to.
'These worries have been particularly compounded for retired expats who draw a UK pension income, but spend in their local currency, as it means they are running a currency risk on perhaps all of their income.'
The research was conducted by a survey of more than 1,000 expats living in countries such as Australia, Canada, France, South Africa, Gibraltar, the Channel Islands and the Isle of Man.
The pound's fall against the Euro at the start of the financial crisis was a big blow for Britons who retired in Eurozone countries, and with it struggling again in the past few weeks, half of the expats surveyed by Lloyds said currency fluctuations are a source of serious concern.
Meanwhile those living in countries like Australia and Canada have to deal with the unpopular government of policy that freezes state pension payouts, whereas those in European Economic Community states and 15 other countries, including the USA, receive rises in line with inflation.
Lloyds has suggested those worried about exchange rates should seek some professional advice to see if they can make their money go further.
This could include transferring their UK pension into the currency of where they're retiring or have retired; or finding a currency company who can lock-in an exchange rate for a specified period if you fear the pound will worsen.
Ms Caerlewy-Smith added: 'Various international pension arrangements exist to serve the needs of British nationals working or retiring abroad. Your pension can be one of your greatest lifetime assets so we would always suggest customers seek professional financial advice in this area.'
Source: Daily Mail
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