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Expats enjoying the strong pound warned to watch out for fluctuations
| Published: | 16 Jul at 6 PM |
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UK expats living in the Eurozone and further-flung destinations are enjoying a boost in pension payments at the present moment, but are warned to watch out for future currency fluctuations.
The global economic crash wiped a third off pension payments for UK retirees living overseas, but the ongoing British recovery has seen sterling soar against the euro over the last half-year. Economists believe the pound will strengthen further due to the European Central Bank’s preference for a weaker euro to support the rcontinental region's recovery.
Rumours that the Bank of England will, by early next year at the latest, begin to raise the base rate from its six-year-low of 0.5 per cent are also expected to benefit sterling. However, experts are warning that pensioners resident overseas should not become complacent, as currency fluctuations are notoriously difficult to predict.
Investors should maintain a diversified portfolio including cash, property, bonds and equities, all of which can protect against currency dips. Perceived investment wisdom rarely applies to currency movements, with collapses usually occurring for reasons no-one could accurately forecast.
UK pensioners living abroad can shield their investments by transferring their pensions to an FCA-authorised QROPS in an overseas financial jurisdiction. QROPS offer a flexible choice of currencies in addition to tax advantages and are becoming increasingly popular with expats.
One problem with QROPS is that investors must be certain they are getting the correct financial advice rather than being dragged into a scam. The internet is alive with websites touting the scheme, it’s difficult to decide whether expat advisors have their clients’ best interests at heart, and less-than-ethical salesmen prowl popular retirement havens overseas looking for victims.
The best way forward is to totally ignore internet-based and local firms and work with a UK advisor registered with and regulated by the FCA. At the very least, if something does go wrong, investors working with FCA-registered advisors have some protection under the UK’s Financial Compensation Scheme.
The global economic crash wiped a third off pension payments for UK retirees living overseas, but the ongoing British recovery has seen sterling soar against the euro over the last half-year. Economists believe the pound will strengthen further due to the European Central Bank’s preference for a weaker euro to support the rcontinental region's recovery.
Rumours that the Bank of England will, by early next year at the latest, begin to raise the base rate from its six-year-low of 0.5 per cent are also expected to benefit sterling. However, experts are warning that pensioners resident overseas should not become complacent, as currency fluctuations are notoriously difficult to predict.
Investors should maintain a diversified portfolio including cash, property, bonds and equities, all of which can protect against currency dips. Perceived investment wisdom rarely applies to currency movements, with collapses usually occurring for reasons no-one could accurately forecast.
UK pensioners living abroad can shield their investments by transferring their pensions to an FCA-authorised QROPS in an overseas financial jurisdiction. QROPS offer a flexible choice of currencies in addition to tax advantages and are becoming increasingly popular with expats.
One problem with QROPS is that investors must be certain they are getting the correct financial advice rather than being dragged into a scam. The internet is alive with websites touting the scheme, it’s difficult to decide whether expat advisors have their clients’ best interests at heart, and less-than-ethical salesmen prowl popular retirement havens overseas looking for victims.
The best way forward is to totally ignore internet-based and local firms and work with a UK advisor registered with and regulated by the FCA. At the very least, if something does go wrong, investors working with FCA-registered advisors have some protection under the UK’s Financial Compensation Scheme.
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