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Only one third of retired expats say their pension income is enough to sustain the lifestyle they want, according to research by Lloyds TSB International.
The survey of 1,168 expats living around the world reveals that only 30% of those who are retired say their pension income is enough to sustain the lifestyle they want. Just over half of expats (52%) who are still working recognise they will have to reduce their spending substantially once they retire.
Despite the squeeze on expat pensions, significant numbers of pensioners felt that their best course of action was to remain abroad, with 47% saying that they thought their pension income would go further if they remained outside the UK, against only 18% who thought they would be better off in the UK.
High living costs in the UK are the main reason for this sentiment, according to the survey findings. Only 26% of respondents thought they would have a lower cost of living in the UK than in their current country of residence.
Currency fluctuations are also a source of concern, with 50% of retired expats with a UK pension saying they were worried about the effects of exchange rates on their pension income. Many Britons who retired in Eurozone countries saw their UK pension incomes reduce dramatically at the start of the financial crisis, when the pound fell heavily against the euro.
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.”
She added: “An alternative approach could be for expats to transfer their UK pension into the currency of the country in which they have retired to, or plan to retire to, thus eliminating exposure to foreign exchange fluctuations.”