What BREXIT means for your pension
The UK’S decision to leave the EU has thrown up a lot of uncertainties, including how it will affect our retirement
While post-brexit fears that many would see their pension funds shrink are, so far, unfounded, interest rates and rates on annuities are at a low. ‘It will be a good while before we understand the full impact of the decision to leave the EU,’ says Carolyn Jones at Fidelity International. ‘A key message is to stay calm and avoid making large withdrawals from pension pots.’
MY COMPANY PENSION… This is protected by the Pensions Regulator, and a new Pensions Bill looks likely to toughen up the rules further still. With final salary schemes, if the company goes bust the Pension Protection Fund provides compensation, so you’ll receive the full amount if you’ve already retired or 90% if you’re yet to retire.
…AND MY STATE PENSION? It should be unaffected, as the Department of Work and Pensions (DWP) says there are no planned
changes. Downing Street has pledged to protect the current triple-lock system, which means pensions will continue to go up according to the inflation rate, the growth in average earnings or 2.5%, whichever is the highest. The new state pension, launched in April 2016, is a single-tier system designed to make pensions clearer and easy to understand. Use the Check Your State Pension Service at gov.uk/check-state-pension to find out how yours is doing.
…OR MY PERSONAL PENSION? It’s hard to determine yet how Brexit will affect personal pensions. The main thing to remember is that pensions are long-term investments and, although uncertainties surrounding Brexit have caused a spike, conditions are likely to stabilise in the long run. ‘Look for funds that put money into a variety of assets, not just one, to minimise risk,’ advises Carolyn Jones.
WHERE IS MY PENSION SAFEST? That depends on you and your situation. Contact the Pensions Advisory Service for free impartial advice (pensions advisoryservice.org.uk; 0300 123 1047). If you’re over 55, have a defined contribution pension and are considering using new pensions freedoms, the DWP recommends contacting Pension Wise (pensionwise.gov.uk) for guidance.
WILL THERE BE MORE CHANGES? There’ll be a review into the state pension age in May 2017. There are already changes to equalise men’s and women’s state pension age, which will continue to increase for both men and women to 66, then 67, by 2028. This will not be affected by the review, which is looking at state pension age after this date. The WASPI campaign (waspi.co.uk), fighting on behalf of women who feel they were discriminated against by the change to pension age, is still going strong.