State pension warning to British expats as move could ‘offset’ triple lock | Personal Finance | Finance
The Treasury anticipates the state pension to rise by an inflation-busting £400 next year and certain British expats are expected to benefit from a “double boost”, an expert has said.
This is because depending on the country a retiree has immigrated to, they’ll also still receive the Winter Fuel Payment, despite the Government narrowing the eligibility criteria this year.
However, these expats are urged to beware of exchange rate volatility, which could potentially “offset” the benefits of the increase.
Russell Gous, editor-in-chief of TopMoneyCompare, said: “The predicted £400 increase in the UK state pension for 2025 is welcome news for retirees, especially as millions in the UK will now be going without the winter fuel allowance.
“For tens of thousands of expats, this will come as a double boost as those living in certain EU countries are still in line to receive the Winter Fuel Allowance as part of the Brexit withdrawal agreement.”
Currently, British expats residing in the EU, as well as in Norway, Iceland, Liechtenstein, and Switzerland, are guaranteed to receive the allowance thanks to protections established by the agreement.
However, Mr Gous noted: “It’s important to remember that expats receiving their pensions in foreign currencies are especially vulnerable to exchange rate volatility.
“A stronger pound can erode the value of their pension when converted to local currency, potentially offsetting the benefits of the increase.”
For those relying on the UK state pension as a key source of income abroad, Mr Gous urged: “It’s crucial to keep an eye on exchange rate trends and consider financial planning strategies that can help mitigate these risks.
“While the headline increase is undoubtedly beneficial, expats must remain aware of the broader economic factors that could impact their financial security.”
The Treasury’s internal working calculations, reportedly seen by the BBC, revealed the pension could be boosted next year as a result of April’s Triple Lock.
Changes would take the full state pension to around £12,000 in 2025/26, after the £900 increase in 2023.
Pre-2016 retirees who may be eligible for the secondary state pension could see a £300 per year increase.
The new state pension system was introduced in 2016 to provide a sustainable, clear foundation pension for people to build their private savings. Any decision on a pension increase will be made by Secretary of State Liz Kendall ahead of October’s budget.
