What’s the deal with Brexit?
Brexit took effect on 31 January 2020 and, according to the BBC, has now begun a transition period which will last until December 2020. Until then, the UK remains in the EU's customs union and the single market. The UK will continue to abide by the EU rules. The deadline for extending the transition period will end on 30 June 2020. If there has been no extension and no trade deal put in place between the UK and the EU, one of two things will happen in January 2021. Either, the UK may begin a new relationship with the EU, or the UK may simply exit the EU with no trade deal in place.
No one knows for certain how Brexit will affect the economy of the United Kingdom, the greater European economy, or for that matter, the global economy. If it contributes towards a downturn, thousands of Britons and New Zealanders’ investments may suffer.
Millions of British ex-pats around the world are on high alert about Brexit. And that’s good because one of the key elements in any kind of investment is staying alert.
How many British-born New Zealanders will be affected by Brexit?
According to official data from the United Nations released in 2014, over 313,000 Britons lived in New Zealand then. Approximately 7000 Britons emigrated to New Zealand in 2017. That was three years ago. Since Brexit, there has been a flood of emigration inquiries.
Most estimates say 80 percent of people who have lived and worked in the UK will have a private or company pension. Many of them have been transferring their pensions out of the UK to places like New Zealand. So, what happens in the UK pensions market is of interest to many people, not just ex-pat Britons, but also to New Zealanders who have lived and worked in the UK on their OE or ‘overseas work experience’.
What will happen if there’s a no-deal exit for Brexit?
Guy Opperman, the UK Parliamentary Under Secretary of State - Minister for Pensions and Financial Inclusion, claimed in September 2018, that British citizens’ rights regarding pensions will remain unchanged, even in the event of a ‘no-deal’ Brexit, which would see the UK crashing out of the EU, rather than leaving in a managed retreat. Boris Johnson, the British Prime Minister has warned that this crashing out could happen in June 2020.
“During this implementation period,” said Opperman, “Access to each other’s markets will remain unchanged and on the current terms, ensuring continuity for consumers and businesses.”
What is the biggest concern about a ‘deal-no’ exit?
The biggest concern is economic instability and what that means for the man-in-the-street. The collapse of Woolworths UK in 2008, BHS in 2015 and Carillion in 2017, all of which saw shareholders’ interests placed above pension holders has, understandably, worried people, especially when it comes to whether other big company pension schemes will deliver on their promises, or not, in the wake of Brexit.
According to The Guardian, if the government leaves the European Union with no deal in place, Britain will plummet into a recession, the first the UK has faced in a decade. Economists at the accountancy firm KPMG said the knock-on effects to Britain’s trade and business confidence of a ‘no-deal’ Brexit would lead to a shrinking of the economy by 1.5% next year. They’re not making this up. The prediction comes after the Bank of England and the OBR, the Office for Budget Responsibility (the Treasury’s independent forecasting unit) alerted the British Government to the negative economic consequences of losing access to the EU single market and customs union overnight. Whether the British Government listens or not is another matter.
On the other hand, if a deal is in place ahead of KPMG forecasts, it would have the opposite effect and GDP growth would be boosted to 1.5% in 2020. That would be a huge relief to pensioners. Unfortunately, having a plan in place doesn’t seem, currently, to be possible.
Managing director of Greenhill Investment Bank, Carlo Bosco, said in 2017: “It looks like the British economy is already suffering its effect with higher inflation, lower consumer spending in particular around the Christmas trading period, and growth rates well below other developed economies.”
The problem is uncertainty
However, Gavin Dixon, CEO of Britannia Financial Services Ltd, says, “No one has ever been through anything like Brexit before, so no one really knows what will happen, and what effect, if any, it will have on the UK economy or the economies of other countries, whether in the EU or not.”
The best thing to do is get sound, expert financial planning advice
Panic decisions are never a good idea. Nor is falling for a pension scheme scam, something that can easily happen when you’re worried and flustered. Britannia Financial is possibly New Zealand’s most experienced retirement planning and financial advice company specialising in transfers of UK pensions to New Zealand.
We suggest that if you haven’t already, make an appointment to chat to one of our expert financial advisers about the state of your retirement finances, no matter how old you are (because you can never start too early when it comes to saving for your pension,) and no matter where they are (in New Zealand). To have a professional and accountable financial adviser on your side will bring you a lot of peace. We can help you with your financial pension planning, give you sound advice when you get a cold call from a fly-by-nighter promising you the world, and guide you through the ups-and-downs of market fluctuations.
There are many pros and cons when it comes to transferring a UK pension. Don’t make rushed or hurried decisions when it comes to your retirement. Talk to us about all your financial retirement planning needs today. We want you to enjoy the best retirement possible.
SHARE THIS PAGE