Colin Richardson, Client Director, PTL said: “We are faced with a once in a generation opportunity to shape the future of the UK as we see it. On a personal level it is an incredibly complex decision but from an industry perspective, the pros and cons are endless.
“Should the UK vote to leave the EU, the largest pensions impact may likely be investment related: greater volatility along with a currency gain from any unhedged overseas exposure. Interest rates and gilt yields may also rise sooner and by more than expected due to perceived credit risk deterioration. We would also expect increased potential for Scottish Independence, which would raise again the issues from 2015: split schemes and so on, and in itself cause market and industry uncertainty and instability.
“It goes without saying that cross-border EU Schemes would be in jeopardy. In terms of pensions law, while the UK would be unlikely to reverse the sex, age, disability or other discrimination or human rights impacts stemming from the EU, it is possible that the UK may be able to permit sex specific annuity rates. By far the most positive outcome would be the falling away of the risk of an EU imposed holistic balance sheet, which, if put in place would be the final blow for DB pensions.
“A ‘Yes’ vote would likely see a potential “relief rally” on the markets, although the impact overall would be limited at the outset. All pre-existing EU law would be fixed, and it would seem unlikely that any pensions directive would be a measure for the UK to trigger the new veto if more than 50 per cent of states reject a measure. Therefore, directives on holistic balance sheets and qualifications for trustees would more than likely come through over time. In terms of what trustees need to do ahead of the Referendum? Not a lot right now, just watch and wait.”
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