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Survey Report

Brexit

Chapter two of 2019 Emerging Trends in DB Survey

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UK Insights on Brexit

November 2019

In this chapter, we take a look at Brexit and its possible effects on pension schemes.

Asked how Brexit has affected the sponsor’s ability to support their pension scheme, a large majority (82%) said it had not made much difference (Figure 2).

Those who think it has affected them were much more likely to be negative than positive; 15% said the sponsor covenant had moderately weakened and 1% said it had weakened significantly while only 2% said it had been moderately strengthened. Respondents in the industrial sector were more likely to perceive a negative impact (23%); conversely those in financial services were less likely to do so (5%)1

Trustees should consider how exposed their employer may be to the various risks and opportunities which may come with the transition of trading relationships and potential changes in economic fundamentals, for example in the strength of sterling”

TPR

Shortly after that referendum, TPR issued a statement saying: “Trustees should consider how exposed their employer may be to the various risks and opportunities which may come with the transition of trading relationships and potential changes in economic fundamentals, for example in the strength of sterling ... Trustees should have an open and collaborative discussion with the employer to understand their views and position…”.2

However, only half of respondents agreed that the sponsor had actively shared information concerning how Brexit would affect their business, with one in five disagreeing. Around a third did not give a view either way – which might indicate that information has been shared but not as much as the trustees would like, or that the effect on the covenant is not thought to be strong enough to merit detailed information being shared.

Figure 2 - survey results of how Brexit has affected the sponsor’s ability to support their pension scheme.
Figure 2: What difference do you think “Brexit” has made to the sponsor’s ability to support the scheme?

2 Survey data was collected in June and July 2019. Opinions on Brexit are fast moving, and results may not reflect current views or opinions.
3 https://www.thepensionsregulator.gov.uk/en/document-library/statements/market-volatility-following-the-eu-referendum,-c-,-guidance-statement-from-tpr-

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