With the referendum result confirming a UK withdrawal from the
European Union, what, if anything, should pension scheme trustees
and sponsoring employers be doing at this stage?
From a legal perspective there will be no immediate change.
Longer term, there could be some modifications to pensions
legislation and regulation in areas which derive from EU law. These
include scheme funding, equal treatment and data protection. We
considered this in a
briefing issued last month.
The immediate impact, which is already evident, is the effect on
the markets (and it is anticipated that this volatility will
continue over the period of the Brexit negotiations). Trustees
should consider taking advice from their investment advisers as to
the implications of Brexit.
Some commentators suggest there may be a rise in interest rates
and inflation which would affect the value both of assets and
liabilities. Trustees may wish to liaise closely with their Scheme
Actuary. The Pensions Regulator suggests that where, having taken
advice from the actuary, it seems to the trustees that material
changes make it unsafe to continue to rely on current assumptions,
funding and investment strategies should be reviewed and, if
Moreover, as part of their ongoing integrated risk management
considerations, trustees will need to monitor the effect of Brexit
on their sponsor covenant and react appropriately.
Trustees of DC schemes may also see a change in the behaviour
and decision-making of members as they approach retirement due to
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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