Since the global financial crisis of 2008 prices have remained relatively stable in most of the developed world. But now inflation is back and it’s not good news for many retired British expatriates. We take a look at the reasons why and discuss how to future-proof your retirement.
Global inflation is rising
Since the global financial crisis of 2008 inflation in developed countries has been low and stable. But that is all changing. OECD figures for September 2021 show a rise to 4.6% compared to 1.3% in September 2020. This has largely been driven by rising energy and food prices and the bad news is that the upward trend looks likely to continue.
Inflation rising is a serious problem for many retirees, particularly British expatriates living abroad and relying on their UK state pensions. The full UK basic state pension will increase next April by £4.25 per week to £141.85 while the new state pension will rise by £5.55. These increases are broadly in line with the UK inflation rate for September 2021. However, an estimated 492,000 British expatriates living abroad and relying on their UK state pensions will not benefit from this rise.
The UK’s ‘frozen pensions’ policy
This is due to the UK’s ‘frozen pensions’ policy which only ‘uprates’ pensions of expatriate Brits living in countries with which the UK has a reciprocal social security agreement in place. While British retirees emigrating to the EU, the US, and a handful of other countries including New Zealand, Japan and the Philippines benefit from annually uprated pensions, those retiring elsewhere do not. Under the current policy (which looks unlikely to change in spite of pressure from groups such as End Frozen Pensions), British expatriates living in countries such as Thailand, Vietnam, Malaysia and Cambodia will never benefit from annual UK state pension increases which means that as the cost of living soars, their buying power will be reduced. Some British retirees living abroad are surviving on as little as £22 per week as a result of this policy.
Plan ahead for retirement
If you are British and planning to retire in Asia, this could affect you. It is just one reason among many to ensure that you plan ahead to future-proof your retirement.
While a state pension is a useful element of a retirement plan and certainly worth securing if you can (click here to find out how), you’ll need to make other provision if you want to maintain your standard of living in your twilight years.
The good news is that there is a huge choice of savings and investments products for expatriates living in Asia. One of our qualified financial advisers can help find the right ones for you based on your financial goals, appetite for risk, income and personal situation.
We specialise in providing bespoke financial planning advice for expatriates in Asia and would love to hear from you. We partner with Tilney, a world-leader in investment management, who help you make the most of your money.
Contact us today and let’s future-proof your retirement together.
A leading provider of expat financial services and wealth management services across Asia.