Weakness of pound hitting expats' dream

Many UK pensioners are being forced to abandon their dream of retiring abroad because of the weakness of sterling.

Specialist currency broker currencies.co.uk said it had seen a 28 per cent jump in the number of retired expats who were selling up and returning to the UK during the past 12 months.

The group blamed the situation on a combination of the weakness of sterling, in which most retired expats still receive their pension, and rising inflation.

It said during the past five years the value of sterling had fluctuated by up to 67 per cent against the currencies in popular retirement destinations, having a dramatic impact on the amount of money people had to live off each month.

For people who have retired in eurozone countries, such as France and Spain, exchange rates on a typical monthly transfer of 1,175 have varied by 49 per cent during the past five years, varying from a high of 1,793 euros to a low of just 589 euros.

Pensioners in the US have seen a 53 per cent swing in the number of dollars they get for the same amount, while those in Australia have been the hardest hit, seeing the number of Australian dollars 1,175 buys vary by 67 per cent, ranging from 3,112 Australian dollars to just 1,247 dollars.

To make matters worse, around half of people who retire abroad do not have a state pension that increases each year in line with inflation. Pensioners who retire to countries which do not have a reciprocal social security arrangement with the UK have the value of their state pension frozen at the date on which they left the UK.