Brexit: What next for pensions?

Securing a better future for long term savings

While the short term impact of the UK’s decision to leave the EU is apparent, the long term picture remains unclear. What effect will Brexit have on broader long-term savings and the State pension; and what can we do now to ensure a better future for employers, trustees and individuals?

In this Brexit overview, we look at how both Defined Benefit (DB) and Defined Contribution (DC) pension savings have been affected, as well as the impact to markets. Not only are we bringing together the views of our own experts, we’re delighted to have contributions from Capital Cranfield Trustees offering guidance to trustees and Gowling WLG giving a legal perspective on what Brexit means for our industry.

What does the future look like for long term savings?

We had an acute savings crisis before the referendum, and the situation has now deteriorated further. Our Guided Outcomes (GO™) analysis of 500,000 DC pension savers shows 65% were not on track to achieve an adequate income in retirement. Post-Brexit, these figures jump to a staggering 75%. 

In his latest blog, Chris Noon outlines the reasons behind the bleak outlook, and what this means for trustees and employers of DC schemes. Read Chris' blog here.

UK Defined Benefit (DB) schemes have also been hit hard. Bond yields have headed south due to the Bank of England’s policy response to the economic uncertainty caused by the referendum result. As a result, UK DB deficits have now breached the £1 trillion mark. You can read Patrick Bloomfield’s views on what this means for the future of DB here. 

Despite these eye-watering figures, John Stannard from Capital Cranfield Trustees reminds trustees to focus on the long-term and to take a considered approach to action. Read his views on how trustees should respond here.

Giving the market context, Graeme Johnston provides an analysis of what we can expect over the short-term.

What impact will Brexit have on pensions law?

Liz Wood at Gowling WLG explains why pensions law is unlikely to change in the near future, and gives her views on what pension schemes should be focussing their efforts on. Read Liz’s blog here.

Now's the time to sort out pensions policy

In a recent webinar we outlined how the savings crisis has become a lot worse. Individuals simply aren't saving enough, and the Government's saving incentives and the State pension are looking increasingly unaffordable over the long term post Brexit. 

With all policy options on the table post the EU Referendum, in our view now is the right time to consider how pensions policy can be improved. To move away from pensions being used as a political football at the expense of long term savings, we’re calling for an independent commission to be set up to take a long term view and secure a better future for all.

Watch a full recording of our recent webinar to hear our views on how industry experts, employers and Government can all work together improve the future outlook.

Keen to get involved?

Hopefully this gives you food for thought on what the future may have in store. Over the coming months we'll be leading a series of debates with industry experts looking at how we can create a better future for long term savings. We’d be interested to hear your views too.

Click here to find out how you can get involved in these discussions.