Pension savers have been urged not to make any sudden decisions in the heat of market volatility.
Mark Futcher, partner at consultancy Barnett Waddingham, said: “Trump’s tariff war has rattled global markets – don’t let it shake your pension too. In times like these, it’s important not to panic. Unless you’ve actively changed how your pension is invested, most people in a workplace pension scheme are in default funds, which are specifically designed to spread risk and grow steadily over time. So if you’re a long way from retirement, even if you see a dip in the short-term, there’s still plenty of time for your investments to recover – ups and downs are all part of the journey.”
For those closer to retirement, the impact will depend on how you plan to take your money.
Mr Futcher said: “If you’re planning to take it gradually through drawdown, remember that your investments will still be working for you long-term through your retirement. And if you’re aiming to buy an annuity and are in an annuity-focused fund, you’re likely already protected from much of the recent market dip because you won’t be heavily exposed to equities.
“The most important thing is not to make any sudden decisions. Make sure you understand what your pension is aiming for, and speak to a professional adviser if you’re unsure. It’s not easy when the headlines are crying crisis – but when it comes to your pension, you really must keep calm and carry on.”
Matt Tickle, CIO of consultancy Barnett Waddingham, added: “The scale and structure of the new tariffs are a clear drag on global growth and have surprised even seasoned market watchers. Rather than being reciprocal, the measures appear arbitrary and wide-reaching – hitting nearly every major economy. This explains the sharp market reaction, particularly in US equities and the dollar. While the inflationary effects may play out over time, the immediate concern is around growth and supply chain disruption.
“For UK Defined Benefit pension schemes, we see limited short-term impact. Funding levels are generally healthy, and direct exposure to US risk assets remains modest after years of de-risking. The longer the threat of tariffs at such penal levels remains in force, the greater the impact could become.”
However, he noted: “UK Defined Contribution members – particularly those in the growth phase – are more exposed, with at least a third of assets typically invested in US markets. While European assets have helped support returns so far this year, we expect increased pressure here, too, as the tariff effects ripple outwards and retaliation kicks in.”
