Last month, we asked our community several key questions relating to the potential impact of Brexit for UK pension schemes. A big thank you to all of the mallowstreet members who participated in the survey.
The Results - Executive Summary
• 65% believe that Brexit will be negative for the UK economy
• 27% currently intend to vote to leave the EU but only 14% think the UK will actually leave
• 68% believe that the referendum is ‘a very big deal for the UK’
• Only 25% believe they ‘have a very clear understanding of the arguments for and against’
• 62% believe that if the UK leaves the EU, Scotland will vote to leave the UK
We are just weeks away from what is a cliff edge moment for the UK and our research gives us a unique insight into what the pension industry is really thinking as we approach it. What is clear with regard to the issues raised is that the majority of those surveyed believe that Brexit is unlikely.
If the UK voted to leave, would this be the first step to the unravelling of the EU? Yes, it can be argued that there is too much bureaucracy and inefficiency in Brussels, but some have highlighted that the regulations that are approved in Brussels actually temper the effect of UK regulatory decisions.
When thinking about managing risk and volatility, it is important to note that pension funds have a diverse portfolio with a global exposure. While there is likely to be increased volatility in the run up to the Referendum, a number of respondents highlighted that a diversified portfolio will help mitigate poor performance and negative returns. In fact, rising yields might actually help reduce liabilities and deficits.
There are passionate arguments and opinions from both the Leave and Remain camps; what remains to be seen is whether people will vote with their hearts or with their minds.