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Expert Answers to Biz Questions
Listen in! Pick up some expert advice to a reader's question that we selected from CyberSchmooz.
How Might Brexit Impact on UK Pensions?
While the Brexit debate and subsequent vote may have caused significant divides between some sections of society in the UK, there’s no doubt that leaving the EU will impact all of us in one way or another.
Whether we leave the EU with or without a deal, for example, businesses are likely to see their operational costs increase once Brexit negotiations have been completed. Whether this is due to rising import costs (caused by the devaluation of the pound) or the need to pay higher salaries, businesses of all shapes and sizes will experience some kind of fall-out.
This means that both national and foreign workers will see their own circumstances change as a result of Brexit. The question that remains, however, is how will this seismic event impact on pensions for workers?
The Truth About Brexit and Your Pension
In many ways, leaving the EU will not affect existing pension plans too adversely. This is particularly true in the case of British citizens, as the requirement for businesses to provide employee pension plans with matched contributions is scribed into UK law.
For foreign workers and EU nationals who live and work in the UK, the situation may be a little more complicated depending on how long these individuals have resided in Britain. Those who have worked in the UK and paid national insurance for 10 years or more will automatically have their pension plans protected, for example, while others will be reliant on the newly confirmed Withdrawal agreement to safeguard their working rights.
This agreement will provide reciprocal protection for UK and EU citizens who are living abroad, ensuring that their financial futures are protected regardless of how the remaining Brexit negotiations play out.
For individuals who work as contractors and self-employed individuals, it’s important to determine how leaving the EU may impact on the viability of any products or asset classes that are included within your scheme. If you have a self-invested pension plan (SIPP) with a provider such as Bestinvest, for example, you may have capital tied up in international assets that relate directly to the EU. This may require you to reconsider your investment strategy, or at least consider the impact of market developments as they unfold.
The Last Word
This may apply to some standard pensions too, as trustees may need to make subtle changes that help employers to mitigate new risks, embrace new hedging products and optimise returns over time.
For the most part, however, workplace pensions will be largely safeguarded by UK law and legislation in the wake of Brexit, while both national and foreign workers can look forward to having their rights protected in the near-term.
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