Since the UK voted to leave the European Union (EU) in June 2016, turbulence in the economy has left millions of people confused and reconsidering their future.
Research has found that:
- More than one-in-four have changed their retirement plans in some way as a result of the unsettled climate following the vote
- A third of us are postponing retirement and will continue to work instead
- A similar percentage will ‘wait and see’ how post-Brexit pans out before making any decisions
Unsurprisingly, this uncertainty has left:
- A third feeling confused about their options; and
- A quarter worried that the vote has affected the value of their pension.
Brexit and Pensions
Pensions are complicated – even more so when you throw the uncertainty of Brexit into the mix.
Although leaving the EU is unlikely to change the way you currently make contributions into your personal or occupational pension, market uncertainty could have a significant effect on the value of both your pension pot and your retirement income.
What it could mean
- Many UK pension funds hold a large proportion of their assets in the UK economy. So, if the economy falters following Brexit, this could affect the pensions you receive.
- This won’t just affect defined contribution pensions – where the fortunes of the scheme are linked to investment market performance.
- Deficits in defined benefit or final salary scheme also increase when the financial markets suffer.
- This could result in a pension scheme’s liabilities outweighing the value of its investments.
That’s why it is important to consider the potential impact of Brexit on your retirement savings sooner rather than later and explore strategies that could help to mitigate the risks.
Things to consider
- It’s important to have a clear understanding of the options available to you, especially if you don’t want to delay your retirement plans.
- Think about all your assets. If you’re concerned about the value of your pension, you may have other assets that could help with planning for your future, including other savings, investments or equity in property.
- Identify any lost pension pots using the Pension Tracing Service.
- Check your State Pension. If you’re eligible to start drawing it, this could provide some income without the need to take money from your personal or workplace pensions. Finding out how much you’re eligible for is quick and easy to do online.
- Consider different options. Most people are familiar with annuities that provide a fixed income for life and income drawdown products that allow greater flexibility to access savings. However, a fixed-term annuity could provide a guaranteed income for a set period without tying you in for life.
- You can use a blend of different products, so that your changing needs are met throughout retirement.
- Take your time. The most important thing is to ensure you don’t rush into a decision and that you have considered all the options available.
Considering retirement plans is undoubtedly a thought-provoking time for all of us and it can be difficult to weigh up the right decisions to take.
It’s your money, your choice and your future, so consider taking professional financial guidance when deciding what your goals are and how you will receive an income for the remainder of your life.
We would be happy to talk through all the available options and help you prepare your pension for whatever lies ahead.