I was wondering if anyone knew how the exchange rate is determined when a UK state pension is paid into another EU member state bank account.

I have searched using the forum search facilities and not found anything. I have used search engines to look (and only found one relatively relevant reference, to a Civil Service pension, not a state pension) and I have looked at the government site, to no avail.

I assume there must be many people that are receiving their state pension abroad and, if not aware of how it is determined, at least aware of how it compares to the then current Nationwide Flex account rate (i.e. the VISA wholesale rate) for withdrawing money abroad (in the EU).

I am not interested in tax implications, just the exchange rate used.

Thanks for any help in that regard.  

If someone can anonymously tell me how much their UK state pension is and how much (in local currency) was paid into their Spanish bank account by the government and the date that the money was paid in, I'll work it out myself.
Thanks!  

Hi Jerbil

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Thanks piglet, and for the pm, but what I want to resolve is statements like “Whatever the current rate is at the time of transfer”.

Whose “current rate” are we talking about?

I know, for example that Australia (when paying pensions) uses the “Bank of Australia” rate, whatever the implications of that are.

I know that Canada uses a better rate than the Visa wholesale rate, as I receive a Canadian state pension in the UK and I compare it to the then current Visa rate and it is always better.

I would just like to confirm whether it is better to have it deposited directly in my country of residence (European) bank account or in the UK and then withdraw using my Nationwide Flex account card, at the Visa wholesale rate.

I am surprised that the government doesn’t state on their website what the process is (perhaps they do but I haven’t found it).

The Civil Service pension reference, that I mentioned in the op, was about someone in Cyprus who noticed that they were getting a worse rate than they could get on the street there and the Daily Telegraph (I think it was), in their investigation, discovered that the Bank of New York Mellon had some sort of contract with the government to deliver those pensions and their method of determining exchange rates was strange, to say the least. I was hoping that the state pension was delivered in a different manner.  

I just realised that I have never updated this.

I did discover a year ago (of course, it could have changed again by now) that what you are actually getting is a “mean rate” determined by Citibank, the US bank that has the contract for dispensing UK state pensions to people overseas.

I haven’t had a chance to determine what that rate typically is or whether it is better or worse than other rates available.  

This touches on a question we have. My husband is due to receive his state pension in February and has just received his pension form to complete. The form actually says they recommend that pensions are paid into a UK bank account and gives 5 reasons for this, some reasons given are, there are no postal delays, no cheque clearance delays and that it is less expensive to arrange and saves taxpayers money. In the section where it asks for bank account details it says payment is either by direct debit into a UK bank account or by crossed sterling order to a bank in the country in which you live.
We are confused because all our friends say their pension just comes across directly into their bank accounts by use of Citibank. The mention of postal delays, cheque clearance delays and crossed sterling order doesn't then make sense to us. It sounds like my husband's pension is to be transferred by a different method to everyone else we know. Can anyone enlighten us aobut this.  

"Walkinonsunshine"
I can tell you that whilst DWP will say that no fees or commisions are featured in calculating the € amount credited to your Spanish bank account, I have always found that the exchange rate is invariably lower than the lowest FX obtained on the previous two/three working days. DWP will assert that they pass the monies to whichever bank they use some days before the friday on which they are due. Personally I have tracked the rates published on the BBC website for some months and I am never seen to beat the above comment. Obviously the bank rips us off in relation to the avowed comments by DWP. The singular advantage is that (my) pension arrives in my bank account here in Spain with neither major pain nor action on my part on the day it is due or the next working day. There are several FX companies who claim to beat the banks, but this is not necessarily true when dealing with governmental payments. However I remain open to proof from others!