Make the most of your UK pension overseas

Make the most of your UK pension overseas

If you have retired to Australia and have a pension from the UK, there are various ways you can make sure that you make the most of your pension payments

If you’re transferring pension payments from the UK, you may be concerned about currency market fluctuations between the pound and the Australian dollar. The market is currently volatile due to Brexit and the US-China trade war amongst other factors, so it’s worth researching all the various aspects and the choices you have to ensure that you have a chance to enjoy your hard-earned retirement.

Receiving a state pension overseas

You are still entitled to your state pension if you retire overseas. Australia doesn’t currently have an agreement to honour the ‘triple lock’ pension increases available to pensioners resident in the UK and countries where an agreement has been reached. This means that the amount you receive from your state pension will be fixed at the point that you move to Australia and will not increase over time. Those increases can make a big difference to many pensioners, so when you’re planning your budget, consider how the cost of living might increase and how the value of those payments may diminish over time. If your state pension supplements a private or company pension, you may find that the state pension is sufficient as an added extra, but if you’re relying on those payments then you want to make sure you make the most of every penny. 

What is the impact of currency fluctuations on your pension payments?

Between the 1st and the 31st August, the pound hit a low of 1.77 and a high of 1.84. This means on a monthly pension payment of GBP2,000 the difference could be between AUD 3,540 and AUD 3,680, which adds up to AUD 140, depending on when you make the transfer. The amount could fluctuate month to month, which makes it difficult to budget. It’s impossible to predict what will happen in the currency exchange market and the pound has been particularly volatile because of the uncertainty of Brexit. Global issues such as the US-China trade war has also been putting pressure on the Australian dollar and the currency market, which fluctuates according to a range of economic and political factors across the world. In addition, to those fluctuations, you’ll need to add on the cost of international transfer fees. 

Tools for planning international transfers of your UK pension payments

It doesn’t have to be complicated to manage your pension across borders, and you don’t have to lose out due to currency market fluctuations or spend all your time monitoring the market. If you like to have some certainty so you can plan ahead, there are tools that allow you to protect your money against movements in the exchange market. If you are transferring an initial lump sum, you can set up a forward contract to fix a prevailing rate for up to two years, and this means you’ll always know just how much currency you’ll get for your pounds. (A forward contract may require a deposit.) You can even automate the payments with a regular payment plan that works like a Direct Debit, collecting funds from the UK, converting them to currency and depositing them into your account. You can opt whether you want to fix just one aspect of the transfer, either the amount of sterling leaving the UK or the amount of currency arriving in your account to make sure you can cover all your bills, or both if you choose to fix the exchange rate.

A currency specialist can help with pension payment transfers overseas

As well as tools to track, target and even fix an exchange rate, moneycorp clients can access great rates, make payments with low transfer fees and manage their international payments. You can’t control fluctuations in the currency market, but moneycorp can help you make the most of your money so you can get back to enjoying your retirement abroad.

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