Many UK pensioners are being forced to abandon their dream of retiring abroad because of the weakness of sterling, according to newly released research.

Specialist currency broker currencies.co.uk said it had seen a 28 per cent jump in the number of retired expats who were selling up and returning to the UK during the past 12 months.

The group blamed the situation on a combination of the weakness of sterling, in which most retired expats still receive their pension, and rising inflation.

It said during the past five years the value of sterling had fluctuated by up to 67 per cent against the currencies in popular retirement destinations, having a dramatic impact on the amount of money people had to live off each month.

For people who have retired in eurozone countries, such as France and Spain, exchange rates on a typical monthly transfer of £1,175 have varied by 49 per cent during the past five years, varying from a high of €1,793 to a low of just €1,204.

Pensioners in the US have seen a 53 per cent swing in the number of dollars they get for the same amount, while those in Australia have been the hardest hit, seeing the number of Australian dollars £1,175 buys vary by 67 per cent, ranging from 3,112 Australian dollars to just 1,865 Australian dollars.

To make matters worse, around half of people who retire abroad do not have a state pension that increases each year in line with inflation.

Pensioners who retire to countries such as Australia, New Zealand and South Africa, which do not have a reciprocal social security arrangement with the UK, have the value of their state pension frozen at the date on which they left the UK.

But even those who do have an index-linked state pension may still see it eroded in value over time going forward.

The government recently announced that the state pension would rise each year in line with inflation, average earnings or 2.5 per cent, whichever is greater.

But it is changing the measure of inflation that is used from the Retail Prices Index to the Consumer Prices Index, which tends to be lower.

Currencies.co.uk said 18 per cent of countries that have a reciprocal agreement with the UK currently have inflation that is higher than the UK’s RPI measure, but this nearly doubles to 33 per cent if the CPI measure is used.

Stephen Hughes, chief analyst at currencies.co.uk, said: “For many years, the strength of the pound persuaded many pensioners to move abroad so their money would go further.

“But now weak exchange rates and high currency conversion charges have hit many expat pensioners hard.

“Many people are finding that the comfortable income they received from their personal pension when they retired is no longer enough to cover their cost of living.

“This, combined with the failure of state pensions to keep pace with local inflation rates in many cases, is leading people to sell up and return to the UK.”