Pension Savers Worry about Brexit Effect, Despite 30 per cent Boost

Four in ten (42 per cent) of Brits think that their pension funds will drop in value thanks to Brexit.

But new data from Aegon has found that the average pension pot invested in the FTSE 100 two years ago, with dividends reinvested, would have seen a rise of more than 30 per cent.

According to Aegon’s research, just five per cent of pension savers think that Brexit will have a positive effect on their pension pot, with millennials proving to be the most pessimistic of all. Just under half (49 per cent) of 18-34-year olds said that they think their pension funds will fall in value due to Brexit.

In October 2017, just 34 per cent of 18-34-year olds believed that Brexit would have a negative impact on their pension savings.

However, analysis of the FTSE 100 has found that a pension pot worth £50,000 invested in the FTSE 100 in 2016 would have actually risen by double digits. This is despite recent volatility in the stock market, and the ongoing low interest rate environment.

“A high proportion of individuals are drawing a link between Brexit and how their pension fund investments may perform going forward,” said

Steven Cameron, pensions director at Aegon. “It’s not surprising that ongoing uncertainty as Brexit negotiations continue means many anticipate a negative impact. However, the reality is that someone who invested in the FTSE 100 just after the Referendum in 2016 would have seen substantial growth in their fund.

“Pensions are particularly long-term investments and those in their 20s, 30s and 40s won’t be turning their pension pot into a retirement income until many years after Brexit is done and dusted.

“This means most people shouldn’t be overly concerned if there are short to medium term movements in fund values. Whether it’s Brexit or one of many other events that lead to volatile and uncertain markets, saving regularly is a good way of ironing out ups and downs.”

Kathryn Gaw

Kathryn Gaw is a financial journalist based in Belfast, Northern Ireland. She has been writing about personal finance and investment trends for more than a decade, and her work has been featured in the Financial Times, City A.M., the Press Association, and The Irish Independent, among many other publications.