Is it time to reassess pension savings?

The UK’s decision to leave the EU is likely to have an impact on a number of different areas of personal finance over the next few years, but one area of immediate concern for many will be their retirement savings.

Most pension policies have so far remained relatively unaffected by the uncertainty following the referendum. However, one area that does seem under risk is defined benefit, or final salary, pensions.

Once a very popular form of retirement saving – particularly for company pension schemes – this style of pension is no longer as popular as it once used to be.

In the hours and days after the vote, liabilities in defined benefit schemes rapidly increased, causing deficits to widen – with deficits across the 6,000 or so schemes in the Pension Protection Fund’s 7800 Index increasing by more than £100 billion. The main reason for this deficit is a fall in gilt yields upon which these investments hinge.

Whilst these high liabilities may just be a temporary increase following a market scare, pension holders need to be aware that this might be part of a larger trend.

A recent speech by Bank of England governor Mark Carney has raised the prospect of an interest rate cut or more quantitative easing, which is likely to keep gilt yields low for the foreseeable future.

This is just one possible outcome for people’s pension post-Brexit and it is difficult to say with certainty what the future will hold for people’s personal finances, which is why it is critically important that those who have concerns seek professional independent advice to ensure their interests are protected.

MT Financial Management is a firm of Chartered Financial Planners that provides independent and unbiased financial planning, investment portfolio management, pension review and trust review services to the clients of Moore Thompson Chartered Accountants and selected professional introducers.

We offer an initial meeting at our cost and with no obligation, so that you can decide whether you wish to use our services before incurring any costs.

We will agree a fixed fee to provide a review of your financial situation, so that our experienced and independent financial advisors can determine whether your financial arrangements are appropriate, and recommend areas that need improvement. Of course, our proposals will be comprehensively explained, so you can make informed decisions about any suggested changes.

All of our advisors are qualified to Chartered Financial Planner status, providing their high levels of technical knowledge and experience on a fixed cost basis.

As our fees are agreed in advance, we are not tied to promoting particular solutions and can focus on providing the best professional advice.

To find out more about our services, please contact Trevor Wilshire on 01775 717220 or visit www.mtfinman.co.uk.