Latest Research: Potential negative returns and uncertainty top concerns for UK pensions industry in the event of BREXIT

A big thank you to everyone who participated in our most recent survey.Our research reveals the biggest concern for the UK pension industry is that a ‘leave’ vote would cause negative portfolio returns and result in a prolonged period of uncertainty.

The Results

• 56% believe BREXIT would be ‘quite’ or ‘very’ negative on their pension fund portfolios

• Over half cite impact of uncertainty as a top concern

• 70% predict increase in costs for their corporate sponsor in the event of a ‘leave’ vote

With just two weeks to go until the Referendum on the 23rd June, these survey results underline how this concern over potential market events is playing out.

The results were striking: just over half of all respondents said they believe that their scheme's investment portfolio would be negatively affected (up to 10% loss) in the event of BREXIT.

Q: How do you think BREXIT will affect your scheme's investment portfolio?

  • Very Negatively (Greater than 10% loss) - 5%

  • Quite Negatively (Up to 10% loss) - 51%

  • No Effect - 32%

  • Quite Positively (Up to 5% additional return) - 10%

  • Very Positively (Greater than 5% additional return) - 2%

In terms of key investment concerns, we asked you to highlight your top three. Once again, top of the list is market volatility, with 1 in 4 (26%) citing this as a concern, next is political uncertainty (21%), followed by exchange rate volatility (18%).

This is our latest survey on BREXIT which follows on from our earlier research on the EU Referendum in May, which found that 3 out of 5 solutions respondents wanted to remain in the EU.

To read the press release, click here

Full List of Key Investment Concerns

  1. Market volatility: 26%

  2. Political uncertainty: 21%

  3. Currency/exchange rate volatility: 18%

  4. Long term lower growth: 16%

  5. UK Recession:15%

  6. Loss of access to investment talent: 4%

The Results - Executive Summary

• 70% say that there will be an increase in costs to doing business in the event of a ‘leave’ vote

• 60% of corporate sponsors conduct more than 25% of their business in Europe

• 55% say their biggest concern is the impact of uncertainty on markets and ultimately pension fund investment portfolios

• 40% say a ‘leave’ vote will make it more difficult to do business with Europe

• In the event of BREXIT, 42% believe UK equities will be the worst performing asset class, followed by 27% who believe the worst performing asset class will be UK property

• 56% believe that BREXIT will have a ‘quite negative’ or ‘very negative effect’ on their pension funds’ portfolio