The immediate impact of Brexit has been the turmoil in the stock markets and in the value of our pension investments for those that are invested in stocks and shares.
Most Public Sector AVC’s for teachers, nurses etc are invested in Irish Life’s largest pension fund, Consensus. The Consensus is heavily weighted toward the Irish Stock Market and the ISEQ index fell 17% at it’s weakest, but has recovered to 14% down.
Interestingly the Consensus Fund is 25 years old this year, it has €4.9 billion invested. It has averaged 3.27% growth per annum over the 25 years (before management charges).
Luckily for IPS clients, many have AVCs and pensions invested in loan notes, bonds and secured investments that have good returns, do not track equity markets and have little correlation to downturns in the market. However, clients who have an equity exposure should review the position with and advisor and decide whether a change is appropriate.
The market turbulence may be a time to reassess your investment/pension portfolio and to re-examine the risk. Following a crash is generally not a good time to reduce exposure to equity as it risks missing the market recovery, but a consultation will help clarify the situation.
For clients with pensions transferred from UK there is no adverse impact.
If considering a transfer, then Brexit would strengthen the arguments to move your pension to Ireland as who knows what restrictions or difficulties may arise in future.
As regards the exchange rate movement, we do not know what the new normal will be, but if you decide to move your pension, we can retain the investment in Sterling, in Ireland, until you decide it is time to convert.
Arrangements for payment of UK State pensions in Ireland are not up for discussion. The British and Irish governments are already in discussion about continuing our open relationship beyond Brexit. We believe that there is no risk of any unilateral cancellation of UK State Pensions to Irish residents and that it continues to offer excellent value for our clients.
If you are concerned about the impact Brexit may have on you and would like to talk to an advisor, please contact us at Info@ipfsa.ie