Editorial: As the reality of the leave vote is sinking in, the British stiff upper lip is invoked incessantly by the pensions industry in an attempt to convince themselves and each other that things can’t be as bad as they are.
“We all know pensions is a long-term game“; “Keep a cool and level head” (Steve Webb, Royal London)
“There’ll be a short-term shock,” after which things will settle down again (Jonathan Reynolds, Capital Cranfield)
“This is not the first, and will not be the last, market turbulence that pension schemes have faced” (Caroline Legg, Sackers)
These are some of the statements by industry figures cited in Pensions Expert.
The country is struggling to emerge from a political crisis induced by cowardly elites – not just through the actual referendum but, I believe, mainly their phenomenal lack of judgment in thinking that you can abstain from replacing dead industries while introducing cuts to benefits.
It came home to roost when voters found a way to express how disaffected they are. The economic and cultural disconnect between London (including Westminster) and the rest of the UK is as stark as it has ever been – or worse.
For businesses and investors, the crisis has only just begun. Pension professionals are quick to console themselves by pointing to the long time horizon of pension funds – but forget to mention that said horizon keeps shrinking at least in defined benefit as funds mature.
Will they still be able to play the ‘long term’ card when the next fallout comes? And will the historical vote by a nation to leave the EU – 31 years after Greenland left the European Economic Community, so we can’t even call it a first – really leave an entire industry largely unaffected?
We will not know for sure. Greenland probably did not have a large pensions sector.
The experts were right about Brexit’s impact despite Michael Gove, as has been pointed out by many, and while it remains to be seen whether the pensions industry’s experts are right about the impact on pension funds, we can only hope that they are.
The only certainty is that the word ‘uncertainty’ will be heard a great deal more from now on.
