Economic uncertainty around Brexit is likely to lead to pensions values rising to a higher level than property assets in the UK, according to analysis by pensions consultancy Hymans Robertson.
Ross Fleming, co-head of defined benefit (DB) investments at Hymans, said: “Figures from the Office for National Statistics show that UK property prices are on the precipice of decline with Brexit on the horizon as the economic outlook remains uncertain.” He noted that Hymans analysis shows that DB pensions, on the other hand, are expected to be more resilient than property in the near term, particularly if there is a no-deal Brexit scenario.
“We analysed the expected financial impact of Brexit which, as has already been widely reported, is expected to lead to greater economic uncertainty in the near term. In times of greater uncertainty when interest rates fall, DB pensions increase in value,” he explained. Conversely, property prices are more likely to fall. In fact, if the outcome is ‘no-deal’, it could mean that for the first time DB pension pot values are likely to be significantly higher than average property values, he added. “They could, potentially, rise in value by 25% relative to property.”
“This could see people facing a situation where their DB pension pot is worth significantly more than their home. So much focus is put on property as an individual’s main asset, but those fortunate enough to have a DB pension may well be surprised that it is worth more,” Fleming concluded.