Western Union Business Solutions, a segment of Western Union Co. (WU) has announced an agreement with UK-based Mercer Outsourcing, a global leader in human resource consulting and related services, to serve retirees.
As per the agreement, Mercer, the largest pension administrator in the U.K, will now reimburse payments to retirees living in 80 countries across the globe via Western Union Business Solutions.
Retired individuals, who receive their pension through Mercer, are set to benefit out of the agreement in different ways. The money can now be directly transferred to a bank account in different parts of the world. The service is available across 80 countries and payments can be made in more than 44 currencies. It ensures that the payment processing time is reduced to a couple of days.
This is a significant transaction for Western Union. Elderly population in the UK is on the rise. As per a survey, only one in ten of the population was aged 65 years and above in 1950. The ratio has gone up to 1:6 in the current context and is likely to be 1:4 by 2035.
Almost half of the 1,100,000 pensioners live out of UK, with a majority of them based in Spain, Germany, France, Ireland, Australia, Canada, South Africa and New Zealand.
The immigration of U.K pensioners is expected to continue to these places, which offer them additional freebies. The benefits include free TV license, no rental charges for telephone, free calls, electricity at lower rates and free transportation facilities. All these ensure that the seniors enjoy a better standard of living.
The Institute for Public Policy Research indicated that there were 252,000 British pensioners living abroad as early as1981. Ten years later that number had more than doubled to 594,000 and by the beginning of 2006 it crossed the one million mark. The Foreign and Commonwealth Office estimates that approximately 38% of people aged 55 years and above are planning to relocate over the next few years.
These developments augur well for Western Union, which is planning an expansion of this service in the U.S. and Australia as well.
Western Unioncompetes closely with Moneygram International, Inc. (MGI). Western Union currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on its shares.
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