UK schemes prepare for Brexit

UK pension schemes have stepped up Brexit preparations significantly over the last 12 months, research by the Pensions and Lifetime Savings Association (PLSA) has revealed, with nine out of 10 (88%) trustee boards having discussed the impact of Brexit on their scheme. About two-thirds (63%) of schemes have formally assessed Brexit risks, while nine out of 10 (88%) workplace pension fund trustee boards have discussed the potential impact of Brexit on their scheme (up from 63% in 2018).

The PLSA’s findings also show that two-thirds (63%) of those surveyed have formally assessed Brexit risks (up from 26%) and three quarters (75%) said they have discussed the potential impact on their sponsoring employer (previously 61%).

In light of their assessment, more than half (55%) of workplace pension schemes have taken specific action to mitigate the risk of Brexit, compared to 28% last year. The extra preparedness is reassuring news for 17.3 million active workplace pension savers in the UK, especially given fewer schemes this year than last year think Brexit will have a negative impact on their schemes, particularly if there is a deal.

James Walsh, head of member engagement at the PLSA, said: “The PLSA has been engaging with the government and regulators to ensure they fully understand pension schemes’ perspective on Brexit. We have also recommended actions for pension scheme trustees to ensure their scheme is well placed to deal with Brexit.”

The top six actions pension schemes surveyed have taken to mitigate Brexit risks are: reviewed asset allocation, reviewed the employer covenant, reviewed currency hedging strategy, reviewed hedging strategy of non-currency risks, commissioned extra advice from professional advisers and changed asset allocation.