Keep cool and plan for the long term

FOR pension savers, these can seem like frightening times. Seeing stock markets plummet and the Prime Minister resign can unsettle even the most experienced investor. But what is the real impact of Brexit likely to be on pensions? The first thing to bear in mind is that for most people pensions are a long-term project. Over a lifetime of pension saving there will always be market booms and crashes, so it is important to avoid a knee-jerk reaction. Those who have saved steadily into a pension – topped up by tax relief and employer contributions – will have a far better retirement than those who have not.

Also, many company pension schemes will be invested in a range of markets and assets, not just UK equities – which should dampen the impact of stock market falls here.

Getting a good pension has always depended in the long run on a healthy economy. While we are about to experience a period of

considerable uncertainty – years, rather than weeks or months – the crucial question is whether we can negotiate robust trading deals with other European countries and the rest of the world.

Britain was a trading nation before we joined the EU and many countries sell more to us than we sell to them, so they will have an incentive to help us get through the present uncertainty.

For those people who are already retired there is speculation that the Government may have to cut spending and could target perks such as the ‘triple lock’ on the State pension. But given the way older voters had a crucial impact on the outcome of the referendum, it would be a brave Government that decided pensioners should be first in the queue for cuts.

In any case, with a fragile economy, the case for austerity and spending cuts is weaker rather than stronger.

Investors thinking of making major changes to their savings should seek impartial advice. But keeping a long-term perspective and a cool head is wise counsel. Steve Webb was Pensions Minister in the Coalition