Pension Funds Insider

Pension Funds Insider brings the latest pensions news and industry insights; from investment and governance updates to new mandate appointments and pensions regulatory information.

2016 - What a year!

03 January 2017

Image for 2016 - What a year!

History will look back on 2016 as the year when politics became predictably unpredictable.

We live in interesting and fascinating times, the world is changing, and changing very quickly.

A Shifting Political Landscape: The Arab Spring of the West?

The political events of 2016 will have an influence on policy that will impact future generations to come. Are we living through a more peaceful 'Arab Spring of the West' - that is, a monumental shift in attitudes, expectations and norms?

Boris and the Brexiteers convinced the UK that we were better off outside of the EU and we waved goodbye to David Cameron.

Theresa May says "we will make a success out of Brexit", and the Government is keeping its cards close to its chest. It remains to be seen how detailed a plan the public will see in advance (or during) negotiations.

One possibility is the UK will ultimately enshrine all EU legislation into UK law, then unpick the pieces we don't like. This process will take years.

A challenge has been fought all the way to the Supreme Court to clarify who has the ultimate authority to trigger Article 50: The Government or Parliament? We are settling into a time of prolonged uncertainty.

On the other side of the Atlantic, President-Elect Trump (I am still getting used to this) is forming his cabinet, committed to 'shake things up' and 'Make America Great Again' (I am also still unclear, exactly, what this means).

The Fed continues its attempts to normalise interest rates, and it unclear if Trump's promises of tax cuts and infrastructure spending will breathe further life into the American economy.

Key elections loom on the horizon in Europe, with important decisions as to who will lead France and Germany.

What Autumn Statement?

We did get a rare bit of certainty this year. We saw the first, and last, Autumn Statement by the current Chancellor. Three key questions remain for those in the pensions industry, and perhaps they will be addressed in the Budget: what does the future hold for the triple lock, tax relief for higher earners, and a lifetime cap on pensions?

Or, is this government going to be so preoccupied with leaving the EU that pensions won't even get a mention? This could be a silver lining in that stable policy that would allow a stronger foundation to support a retirement system to help all members of society.

A volatile new world

The new political landscape will re-introduce volatility. It will be a bumpy road as soundbites become policy, and policy becomes legislation. Global markets will react first (digesting later) through this process. Perhaps the idea of 'sell now / buy now and ask questions later' will become a recurring theme.

Volatility will bring along a new opportunity set, with many set to benefit from opportunities that are on and off the Bloomberg Screen.

Solving the Pensions and Savings Crisis

So, what now for the UK pensions industry? it is crucial that we continue to innovate and create savings and retirements products that allow the individual member to take advantage of these new opportunities: real solutions that are transparent and most importantly, easy to understand. And of course, they must be affordable. Gone are the days when a significant amount of returns can be eaten by a high level of fees.

A Brave New World

2016 taught me to expect the unexpected. It also taught me that dialogue and collaboration hold the key to unlocking seemingly impossible challenges.

As we enter a brave new volatile world in 2017, we cannot begin to predict what is in store, but it is this dialogue with peers, clients, customers, and collaboration (beyond our traditional industry peers) that will help us to identify the key components that we need to solve the pensions and savings crisis.

Written by Stuart Breyer, CEO, Mallowstreet.