The decreasing value of the pound since the Brexit vote last summer has left hundreds of thousands of expat pensioners on the brink of poverty.
More than half a million British retirees have had their State Pensions frozen after moving abroad. According to the rules, the amount they get paid will remain the same as it was on the day they left the UK.
This has meant inflation has slowly eroded the value of their pensions, but now the falling value of the pound means many are struggling to get by as their State Pension payout shrinks.
All expat pensioners suffer when the pound falls in value – it is currently worth about 15% less than it was before the Brexit vote last may – but it is particularly hard for those living in countries where their pension has been frozen.
Will my pension grow or freeze?
If you emigrate to the EU, US or several other countries including Samoa, Macedonia and Puerto Rico, your State Pension payment increases each year in line with inflation.
However, if you move to a country that doesn’t have a reciprocal pension agreement with the UK – such as Canada, Australia, South Africa and Japan – your pension amount is frozen when you leave the UK. This can mean, as you enjoy years of retirement abroad, the purchasing power of your pension falls.
There are currently 560,000 expat pensioners living on frozen State Pensions.
Detrimental effects of a weakening pound
The Guardian tells the story of Anne Puckeridge, a 93-year-old veteran of the Second World War, who emigrated to Canada in 2001. The falling value of the pound means Puckeridge is now struggling to get by.
If she moved back to the UK her State Pension would increase to reflect inflation, but she can’t afford to buy a house here now due to soaring property prices.
“The recent fall in the pound has made a terrible situation even worse,” she tells the Guardian.
“All my money goes on accommodation, food and the essentials of living. There’s nothing left. I live from day to day, with the knowledge and fear that if the exchange rate goes down any more, I’ll have to use up the last of my life’s savings and then I will literally have no financial cushion left.”
Sir Roger Gale MP is now campaigning for an end to freezing the pensions of expats.
“The post-Brexit fall in sterling is extremely worrying for any pensioner living abroad. Overnight their income has crashed,” he says in The Guardian. “We’re talking about a lot of very elderly, very frail people.”