Regardless of where you stand on the Brexit issue – whether you are a Remainer or a Leaver, deal or no deal – there is little escape from the bombardment of information related to it: from the daily news snippets to the business analysts’ views, work colleagues’ thoughts, friends’ opinions, the onslaught of information and misinformation has seen little let up in the last few weeks and months. Our team of independent financial advisors has been watching developments with interest and keeping up to date with the latest news to put together a useful guide to what you can and should be doing now, before the March 29th exit date. For full details on who they are, visit www.plutuswealth.com.
The last two months have seen a ramp up in negotiations and activity and almost every news story is linked to Brexit in one way or another. While there is still a lot to be finalised, here is our take on how to prepare for our new financial future away from the European Union.
Pensions
For those with a state pension you can be reassured that you will not lose it. Even if you live overseas, you are still entitled to it. However, what is still undetermined is what happens to the value of that pension once we exit the EU. At present there is a reciprocal agreement between the UK and EU (as well with a number of other countries) that a UK citizen’s pension will continue to rise in line with the triple-lock system – in other words, earnings, prices, or 2.5%, whichever is the highest.
In the event of a no-deal exit, this is no longer guaranteed and will either require a mini-deal for pensions to be agreed, individual agreements with each country to be reached or, at worst, a freeze on the level of pension at the time of exit.
For private pensions, things could potentially get a little more complicated. If there is no deal, then this could result in problems paying out to an overseas retiree. There are two issues: the first is of the cost associated with paying out and the second is to do with the exchange rates that would apply between currencies. These issues can be resolved if the UK can reach agreement with EU regulators allowing expats to continue to draw on their UK pensions while living in the EU.
What can you do:
Until a decision is made, we don’t yet know what will happen. In the meantime, speak to your independent financial advisor to discuss your options if you are close to retirement or already drawing your pension and live in the EU to see what your options are.
Savings and investments
The Bank of England recognised the uncertainty in the market as long ago as last summer and this was one of the reasons for raising the base interest rate to 0.75%. The decision at the last meeting of the Monetary Policy Committee (MPC) in early February was not to change it further and so it remains at that level – the highest it has been since 2016. This is good news for those who rely on cash savings. While there is still a chance that it will be reduced in the event of an abrupt end to the UK’s EU membership, the latest decision to retain this rate took account of a range of exit scenarios. There is one more MPC meeting before we exit the EU on the 21st March.
When it comes to investments, possible outcomes are always more challenging to determine due to the volatility of global markets which are not solely affected by Brexit. A no-deal exit could lead to market fluctuations and could mean some losses, as indeed gains, but nothing is ever guaranteed when it comes to stocks and shares.
What you can do:
Our advice is the same as it always is: Don’t put all your eggs in one basket. If you are already an investor, keep a balanced portfolio, including savings in products such as cash ISAs. Talk to your independent financial advisor before making any decisions as they will have a good overall picture of how markets have been behaving.
If Brexit has you worried about your pension, savings, investments or any other financial issue we can help. While this article could be out of date as soon as it is written, given how quickly things are changing, our Plutus Wealth team of qualified, independent financial advisors are on top of the latest financial news and the implications on our customers. Get in touch with us on 020 7871 5200 or by email at info@plutuswealth.com and let’s get the conversation started.
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