Brexit Looming what does this mean for your state pension?

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February 3, 2020

After 4 long years of uncertainty, delays and huge costs to the taxpayer, the days are counting down for Britain to leave the European Union. Where some people may be outraged and others delighted, it's important to understand the next steps for your finances.

When it comes down to planning for your future, it’s important to be clear on the changes to your pension come Brexit. The UK has now officially stated that anyone living in the EU will continue to receive their state pension. There are more than 360,000 people with a state pension in the EU. They will all receive a letter of this confirmation when we leave the EU.

According to the Work and Pensions Secretary Dr Thérèse Coffey said:
“Pensioners in Europe who have paid into the system for years deserve the peace of mind over their future finances.”

Do you have a state pension and want to know what it’s worth today? Contact us, we can also assist you with your private pension or arrange to set one up. 

How Brexit is the saving grace for your investment

Unless you have been living under a rock, you would have heard about the upcoming changes happening in the UK right now. It’s all that’s been across the news for the past few months. 


The UK is due to leave the European Union (EU) on 31 January 2020, after Prime Minister Boris Johnson's Brexit deal was backed by MPs.

A public vote for referendum - was held on Thursday 23 June 2016, to decide whether the UK should leave or remain. The leave party won by 52% to 48%. The referendum turnout was very high at 72%, with more than 30 million people voting and 17.4 million people opting for Brexit.

Regardless of how you voted, the outcome is now inevitable and it is set to change the way the UK trade and invest. More importantly, it has substantial knock on effect to how you can diversify your investment and the opportunities made available by Brexit.

There are three key areas you need to be considering as part of your investment strategy: 

  • Currency fluctuation 
  • Trade agreements (UK companies with EU and worldwide)
  • FTSE movements (Companies moving outside of the UK)

Currency Fluctuation 

Firstly, what exactly is currency fluctuation?

Each and every currency has value, in relation to other currencies. Those values can and will change constantly. However, even a slight change in the value of a currency can send vibrations across the economy. 

Why do the currencies of a country fluctuate? If demand for a certain currency is high because people  want to invest in that country's stock market or buy exports, the price of its currency will increase. Whilst some currencies oscillate freely, like Yen and the US dollar, some others are linked. 

Economic movements can impact the currency fluctuations of a country. The latest example being Brexit. To make a long story short,  the initial shock of Brexit, has weakened the pound. In actuality, the price of the pound is currently lower than it has been for three whole years.

With the United Kingdom’s vote to leave the EU and Boris Johnson now heading the government, it will have a significant impact on the currency markets. The pound has actually been declining since the referendum in 2016. 

Consequently, this means that people who are looking to exchange pounds into other currencies are getting less for their money. However, anybody looking to purchase pounds, will find that the current exchange rates are profitable.

How will this diversify my personal investment you might be asking? Well, currency fluctuation can impact the economy massively and a stronger economy generally implies a stronger currency.

Exchange rate fluctuations can have a substantial impact on your investment portfolio, even if you only hold domestic investments. The indirect impact of exchange rates extends to the prices you pay on all of your interest rates on your loans, the price you pay at the supermarket and even the returns on your investment portfolio.

A diversified portfolio is a must when it comes to long-term investment success. Currency fluctuation allows you to be able to spread your assets, which will enhance the odds that a fall in one market can be counterbalanced by the greater performances in others.

Trade Agreements

A trade agreement, which can also be known as trade pact, is a wide-ranging taxes, tariff and trade treaty that often includes investment guarantees.

With Brexit on the horizon, there are obviously some trade agreements that have or need to be put in place. So far, the UK has signed 20 "continuity" deals covering 50 countries or territories, including, South Korea, Central America, Switzerland, Israel and Morocco.

There are two main options when it comes to what you could do with your money when it comes to the approaching Brexit. You could keep your money in the bank. It will be safe and out of harm's way, however, you will miss out on the potential to grow it. 

The second option, is to invest it. You could spread your finances, putting your funds into investments between the UK and overseas. By investing in a variety of different types of investments, such as commercial property, personal property, company shares or corporate bonds, you can seize this opportunity to diversify your portfolio. Funds will pool all of your money along with other investors and give the exposure to more investment than you would be able to buy yourself.  

FTSE Movements

Let’s start by breaking down the jargon that surrounds the FTSE movements. FTSE stands for Financial Times Stock Exchange and it is essentially a list of the 100 biggest companies listed on the London Stock exchange.

The size of these companies are measured by their market value. As the shares of the company begin to change in price, so will their market value. In turn, their overall index will adjust in value. So, how does that affect your investment?

Every fund that has investors also has a manager. These managers rely on the FTSE, which is made up of indices and usually, they will treat them as benchmarks. For example, if you invest in a passive fund, the manager will rely on the index as they will purchase the constituents listed.

Their aim will be to match the performance of that index for you, the investor. However, if you have invested in an active fund, the manager’s aim will be to exceed the index.

If you are a UK pension fund holder, a portion of your personal pension investments will likely be invested in the UK shares that are listed on the FTSE index. The performance of the index will have an effect on your investments, similarly too if you are invested in any stocks or even have shares in an ISA.

Investment can be a tricky subject to grasp and it can become even more complex when you throw in economic changes such as Brexit. Be that as it may, Brexit could be your opportunity to diversify your investment portfolio. You can always find something that will make you feel nervous about investing your money.

Don’t use Brexit as a reason to delay you or even prevent you from growing your personal wealth.