Charges hit pensioners abroad
The Scotsman, 26 March 2006
By Joe McGrath
PENSIONERS claiming their pensions abroad are losing out to the tune of £300 million a year, due to hefty charges. Research from foreign exchange broker HiFX shows such people are paying charges of up to £40 per transaction to gain access to their pension.
More than a million British people now claim their pension abroad, with the vast majority falling victim to these fees. Mark Bodega, marketing director at HiFX, said British banks were hiding behind foreign currency fluctuations and profiting substantially in the process. "With over a million retirees living abroad and claiming their pensions from the UK, this equates to a lot of money being paid in fees and unnecessary bank charges," he said.
Banks charge a variety of different rates for sending money abroad. Barclays is the worst offender, charging £35 per transaction plus percentage fees, while Lloyds TSB comes in second place with a charge of £30 for each transfer made. Abbey charges £25. Nationwide, HSBC and First Direct all charge a standard rate of £21, but campaigners would like to see more done.
John Stewart, managing director of financial advice firm PMI, said consumers should look at brokers, foreign banks and former mutual societies if they are not to lose out. "The best thing is to phone around to the major clearing banks and find out what the charges are before you move abroad," he said. "The trouble with using a foreign exchange company is knowing where to start. "Charges of £40 are extraordinary and it's worth trying the former building societies and local banks in the new country of residence that offer the service."
Foreign currency brokers have eyed a gap in the market and are now looking to pick up slack by encouraging consumers to change the way they access their money. Foreign Currency Direct and HiFx are two brokers that already offer services to consumers wanting to transfer funds to banks abroad. Peter Ellis, chief executive of Foreign Currency Direct, said more options had recently become available to consumers. "With the high street banks reporting record profits, [we are] encouraging consumers to avoid strengthening the profits. People must consider the impact of exchange rates as an enormous amount of money is needlessly 'lost in transaction'. "Always consider obtaining a comparative quote, otherwise you risk further inflating the enormous profits already made by the banking sector."
HiFX and Foreign Currency Direct both offer direct debit services, so the consumer does not have to deal with either their foreign or UK bank and it is possible to arrange fixed exchange rates for a period of months. Of this, Bodega said: "Retirees no longer have to pay expensive bank charges. The HiFX regular payment plan means they will be receiving the same amount of income every month so they can budget and save the worry of currency fluctuations."
Charges
THE cost per transaction:
Barclays £35
Lloyds TSB £30
Abbey £25
NatWest/ RBS £25
Halifax £25
Nationwide £21
HSBC £21
First Direct £21