What Brexit means for your pension

Hayley Kirton
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EU Referendum - Strasbourg The Seat Of The EU Parliament
The ABI has moved to reassure people that their pension pot should be well looked after (Source: Getty)

The UK went to the polls yesterday to make the historic decision to leave the EU, a result the markets had not exactly geared themselves up for.

More than £100bn was wiped off the FTSE 100 this morning, while the pound dropped to its lowest point against the dollar in over 30 years, so many people are likely wondering what impact this has all had on their pension pot.

Partners at professional services firm KPMG were less than optimistic about the outlook for those who were planning to say goodbye to the day job in the not-too-distant future, with David Fairs pointing out the current levels of volatility made it very difficult to plan in the short-term.

Brexit Britain: What you need to know

"Deferring retirement until markets stabilise might be a sensible decision although there might well be short term opportunities to bag a bargain in volatile markets if interest rates rise and they have overseas holdings," Fairs added.

Experts are also warning that the EU membership decision could lead to further problems for defined benefit (DB) pension schemes.

Richard Cousins, PwC pensions partner, pointed out the referendum had been a double-whammy blow for DB pensions, which had already suffered as a result of uncertainty in the markets in the run-up to the vote.

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"Employers with DB schemes will need to work closely with trustee boards to assess the current strategy to deliver a fully funded scheme," Cousins said. "Trustee investment committees will need to meet frequently over the coming months to manage this period as robustly as possible."

Brexit Britain: What you need to know

However, the Association of British Insurers (ABI) moved to assure worried would-be retirees.

"Having your savings in a fund managed by a pension provider means they are being professionally looked after, and this will include strategies to minimise the impact of any periods of poor performance," the ABI said in a statement. The UK insurance and long-term savings industry is strong and built to protect customers from market uncertainty and shocks."

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Alastair Meeks, pensions expert at law firm Pinsent Masons, offered a similar message to pension trustees, advising them not to panic and to focus on what the markets were doing at the moment rather than worry about what could be down the line for regulation in the future.

"Trustees shouldn't mistake the interesting for the urgent," Meeks added.

Meanwhile, the Pension and Lifetime Savings Association (PLSA) has called on the UK government and policymakers in Brussels to take steps to address the levels of volatility in the markets and otherwise advises something of a wait-and-see approach.

Read more: Why the UK is facing a time bomb of retirement woes

"The ramifications for UK pensions of the UK's decision to leave the European Union will start to become clear over the coming weeks and months," said Joanne Segars, chief executive of PLSA.

"Much will depend on the precise nature of our future relationship with the EU, which may mean that some aspects of UK pension provision continue to be influenced by the EU. In other areas, UK pension law may need to be disentangled from EU legislation."

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