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The Federation of European Independent Financial Advisers

Currency risk is an important consideration for anybody holding a UK pension who plans to retire abroad.

With the Pound having fallen in value by 38% in relation to the New Zealand Dollar since January 2001, 28% in relation to the Australian Dollar, and 55% in relation to the Swiss Franc over the same period, currency risk has the potential to significantly impact the value of your UK pension funds held in Pounds Sterling (GBP), diminishing their buying power and the lifestyle they afford you, when you retire abroad.




As a British expat moving to a Eurozone country in January 2001, you would have enjoyed an exchange rate of 1 GBP: 1.58 EUR. That compares with 1 GBP: 1.16 EUR in January 2024, a reduction of 26% over that period.

In effect therefore it would now cost you 26% more to buy the same goods or services in EUR using GBP, and the contributions made to your UK pension in 2001 would be affording you two-thirds of the lifestyle you had planned for when you made the investment, before you even account for inflation.

And the impact is equally acute for UK schemes that pay a guaranteed pension income in GBP. You would no doubt be asking serious questions of your financial advisor if your investments had lost 26% of their value over the same 23-year period.

Suddenly, a guaranteed retirement income is not quite as ‘guaranteed’ as it seemed.

At Forth Capital, we want to mitigate your currency risk if you plan to retire abroad. One of the ways in which we can help you do this is by exchanging the currency in which you hold your funds to the currency that you will spend in retirement.

However, we understand that your plans can change, and even having retired abroad, the pull of family and familiarity can eventually result in a return home. The most important thing therefore is to have flexibility and the option to save and invest in different currencies, with the expertise of an international financial planner to help you make the right decisions every step of the way.

This article was kindly provided by Forth Capital and originally posted at:

The above contents and comments are entirely the views and words of the author. FEIFA is not responsible for any action taken, or inaction, by anyone or any entity, because of reading this article. It is for guidance only and relevant professional advice should always be taken before investing in any assets or undertaking any financial planning.