There is no doubt that the future will bring major challenges for the financial markets after Britain have voted to leave the EU. However, it is still too early to say which exact effect it will end up having. In the short run, the financial markets will be much more unstable and on a daily basis, we will experience significant fluctuations, which we have not seen since the credit crisis in 2011 and the financial crisis in 2008.In a general perspective, the global economy still looks very reasonable, so there is no question regarding an economic crisis. It is more uncertain regarding what will happen in the future, and what impact it will have on the entire cooperation in Europe.
How do pension companies invest and what does Aon recommend?
Pension companies have worked with the scenario that Britain could vote to leave the EU for a long time, and there is thus already strategies, built upon this scenario in the respective investment funds. There is no doubt that all individuals who are having savings in a market interest-rate product, with yields due immediately, will be able to see it on the return in the time to come.
In Aon, we recommend lifecycle products for the vast majority, where the risk automatically will be calibrated downwards over time. You will only have a few shares in your savings product if there is a short time until you retire and you will thereby not notice the big fluctuations on the market. You will typically have many shares in your savings product if there is a long time until you retire and you will therefore notice some fluctuations in the value of your pension savings account in the time to come.
We recommend that you keep your current lifecycle product and your current risk profile regardless of whether you have a short or long time to retirement. This takes into account that over a long savings period there can be significant volatility, which historically has proven to recover over time.
In a time of great turmoil, you should have steady nerves and think in a long-term perspective. However, it is always good to evaluate whether your current risk profile remains the right choice, but this assessment should be based upon criteria other than short-term fluctuations on the financial markets.
If you got any further questions
… regarding your pension savings account, then you are of course welcome to call us on the phone 32 69 70 70. You can also write to us at firstname.lastname@example.org