Following the UK’s decision to leave the EU, there have been concerns on the implications for retirement savings for pensioners.
Which? have outlined the following areas which savers should be aware of.
Individuals who reach state pension age on or after 6 April 2016 are eligible for the new single-tier state pension of £155.65 a week. This applies to men born after 6 April 1951 and women after 6 April 1953.
The state pension is protected by the ‘triple lock’ which guarantees a rise by price inflation or average earnings. This may be reviewed in the long-term due to economic changes.
Due to Brexit pension firms have been cutting annuity rates on their products by up to 8%.
This was followed by falls in gilt yields (government bonds) which firms use to provide income to savers.
Pensioners who have received a quote before the decline are usually guaranteed for 2-4 weeks. New customers are likely to be offered lower rates due to changes.
Defined Pension Contributions and Income Drawdown
Pensions on defined contributions or converting their savings into income drawdown could be affected by market changes.
For younger people with smaller pots, losses may be smaller as they will be in the early stages of retirement.
Older savers may be protected by having their shares converted into cash or bonds, allowing opportunities to buying investments at lower prices.