Brexit and Pensions
Turbulent times ahead for pension funds?
The UK’s vote to exit the European Union on 23rd June caused unprecedented short term market volatility and will have far reaching implications over the coming months and years. Defined benefit pension schemes are already feeling the effects of the Brexit vote and face a ‘triple whammy’ of exposure to financial markets, the fortunes of the sponsoring employer and changes in government policy. The full ramifications for pension funds will not be known for some time, however trustees and sponsors should take a pro-active approach to manage the immediate volatility and longer-term uncertainty.
This paper analyses the potential impact on pension funds of the financial markets’ immediate reaction to Brexit. It goes on to discuss the strategic implications for trustees and sponsors through the four key lenses of;
- investment strategy;
- Employer covenant;
- Scheme Funding; and
- Operational Efficiency
and identifies key actions to consider over the coming months.
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