Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • June 2016
06

UK pension deficit jumps by £80bn overnight due to Brexit

Open-access content Friday 24th June 2016 — updated 4.14pm, Thursday 30th April 2020

The gap in UK defined benefit (DB) pension funding has now reached £900bn, an increase of £80bn from yesterday, as a result of UK's decision of leaving the EU, Hymans Robertson has confirmed.

2

However, pension experts urged savers and trustees "not to panic" and warned schemes against "knee-jerk reactions" to short-term market volatility. 

Hymans Robertson head of corporate consulting Jon Hatchett, said: "Those running DB schemes need to remember that pensions are a long-term game."

However, he added pension funds were vulnerable to uncertainties. 

"Following the vote to Leave, it's likely that falls in expectations for UK GDP growth will weigh on equity markets and on interest rates - putting more pressure on funding deficits," he said. 

Commenting on sponsor covenant, Hatchett said companies would need their contingency plans, adding: "Trustees will rightly want to understand what these plans look like, and reassess their scheme funding strategies accordingly."

Hugh Nolan, director at Spence & Partners, agreed that funding was a long-term proposition and schemes should avoid any "knee-jerk reactions".  

Nolan also believed trustees could potentially take advantage of the expected in market volatility to reach their investment objectives. 

"Setting clear targets in advance and monitoring market movements will allow schemes to trigger investment switches whenever market conditions are favourable, locking in improvements as they happen without needing extensive discussions that lead to missed chances."

KPMG partner David Fairs predicted a Brexit would make it difficult to plan in the short term for those expecting to retire soon.  

He suggested deferring retirement until markets stabilise, but added: "There might well be short-term opportunities to bag a bargain in volatile markets if interest rates rise and they have overseas holdings".

Tom McPhail, head of pensions research at Hargreaves Lansdown, agreed against making any hasty decisions.

"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," he said.

 

"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."

This article appeared in our June 2016 issue of The Actuary.
Click here to view this issue
Filed in
06
Topics
Global

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Catastrophe Modelling Analyst - London Market Broker

London, England
£40000 - £50000 per annum
Reference
145925

Senior Catastrophe Analyst

England, London
£65000 - £75000 per annum
Reference
145924

Life Actuary - Financial Reporting - Day Rate contract

Negotiable
Reference
145923
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ