Pension savers have been urged not to panic, or make hasty financial decisions they may later regret, following the vote to split with the EU.
The outcome of the referendum wiped billions from the value of major stocks in which pension funds invest, and the resulting uncertainty is expected to deliver at least a short-term jolt to UK growth.
Our key message to pension savers is ‘don’t panic’Steven Cameron, Aegon UK
It could also lead to the first hike in interest rates in more than seven years although a protracted period of low growth may see the Bank of England actually cut borrowing costs, effectively to zero.
But pension experts said the message should be “don’t panic” amid the uncertain outlook, as they urged savers to consider taking advice if they planned to take money out in the near future.
Tom McPhail, head of retirement policy at financial adviser Hargreaves Lansdown, said: “For long-term pension investors who may be seeing the value of their retirement savings falling today, the key message is to do nothing unless you have to.
“We are likely to experience a period of volatility in the markets and uncertainty in the wider economy. In these conditions, acting in haste is unlikely to serve well. If you are years from retirement and making regular savings, then just keep going; falls in the market mean buying investments at a lower price.
“If you are close to retirement, then try to avoid selling funds and shares right now. Annuity rates may move in response to changing interest rates, however this is not certain.”
He warned there could be changes to the state pension as the UK government looks to make savings. The “triple lock” on state pensions, which guarantees they are uprated by a certain level, could be an “early casualty” of a Brexit.
Former pensions minister Steve Webb, now director of policy at mutual Royal London, which employs more than 1,000 people in Scotland, said: “Consumers who are concerned about their pensions and investments should take informed, impartial financial advice and avoid making knee-jerk decisions.
“Whatever action consumers choose to take it remains important that they continue to save and invest for their own retirement. There is no substitute for long-term saving when it comes to securing a comfortable future.
“Ultimately, pensions are a long-term project and their future depends on a healthy and growing economy. This, rather than the immediate future, will be the key test which will determine the quality of life in retirement of millions of UK citizens.”
Steven Cameron, pensions director at Edinburgh-headquartered Aegon UK, said: “Our key message to pension savers is ‘don’t panic’.
“If you have a defined contribution or personal pension, its value will be affected by stock market movements and if you are thinking of taking money out in the immediate future, we recommend you first seek advice.”
He added: “The UK government might consider other changes to pensions in response to wider economic conditions and we will be monitoring closely any possible impact on our customers.”