With the EU Referendum having resulted in a majority voting to leave the EU, pensions might be seeing a drastic change after all.
If Brexit prompts a severe shock to the economy, inflation will also be a big danger to pensions. With prices rising, if you’re on a fixed income from an annuity you will have a lower spending power.
The Short Term Effects
A short term impact due to market instability is also a possibility. Pensioners outside of the UK could also be affected; the current arrangements between the UK and pensioners abroad in Europe means that the latter benefit from inflation proofing of their state pension incomes.
The original scheme of the Pension Protection Fund (PPF) which was devised in 2005 was created to comply with European regulations on pension funds of workers. The PPF protects workers’ defined benefit pensions in case any issue arises, but it’s highly dependent on EU legislation.
What Will Happen to EU Legislation?
There are questions over whether legislations provided by the EU will remain in practice; the Equality Legislation, for example, that assures that there are gender-neutral annuity rates, and the Cross Border Schemes and Institutions for Occupational Retirement Provision, which generally allow pension funds to operate across the EU.
Other EU legislations could also directly affect UK pensions. Passporting, in which most of the UK’s regulation comes from EU directives, means that some pension products which come from the EU might no longer be available in the UK. QROPS (or Qualifying Recognised Overseas Pension Scheme) guarantees that some people living overseas are able to receive UK pension benefits with no charges, which has greatly benefitted Malta and Gibraltar.
Ultimately, speculation is still all that is allowing any projection outcome for Brexit on pensions. Seeking professional advice is the best option at the moment; deciding on what step is the best to take will depend on your individual circumstances.
If you would like to gain some insight into how this latest announcement will affect you and your pension scheme, or simply want to know more about how we can help you here at Burton and Fisher, don’t hesitate to get in touch with our team today. Our team of experts will be more than happy to help you in any way possible.