What the UK general election means for your retirement

Published on July 9, 2024 by duncan
Some casting a vote at a ballot box

With more than 60 countries due to hold an election this year, it’s estimated that around 2 billion people will head to the polls before 2024 is out.

The UK general election, on 5 July, represented the culmination of a hastily organised and hotly contested month of campaigning from all the major UK parties and saw a landslide for Sir Keir Starmer’s Labour party.

Against a backdrop of global conflict, an ongoing climate crisis, and rising immigration, the result has ramifications for many aspects of life at home and abroad – not least finance.

We know that stock markets hate uncertainty. And with so many elections and so much at stake for voters, it’s only natural that you might be worried about the effect of global elections – and the result at home – on your pension investments.

At The Pension Planner, we’re on hand to provide reassurance whatever the wider world of finance brings.

Markets don’t like uncertainty but historic market movements suggest your plans won’t change whatever the result

You’ll have heard us talk before about the need for a long-term investment goal, and the general upward trend of the market.

We can see this by looking at the FTSE All-Share Index since 1984.

Source: London Stock Exchange

The short-term dips inherent in the market are clear here, from uncertainty caused by the Iraq War in 2003 to the global economic crisis of 2008 and the onset of the coronavirus pandemic in 2020. Visible too, though, is the general upward trend.

And remember, this period saw a total of nine prime ministers.

We can see this more clearly in the below graph from Timeline. This looks at the UK equities market since 1925, superimposing the changes in government over that time.

Source: Timeline

Despite some dips around the time of a leadership change, likely reflecting market uncertainty, the upward trend is even clearer over this near-100-year term.

The leading parties had their own takes on tax and pensions but ignoring the noise remains key

The party manifestos released during the campaign highlighted the different approaches of the main parties on issues like tax and pensions.

While the Conservatives had plans to reduce National Insurance and introduce a so-called “triple lock plus”, Labour promised not to increase NI, VAT, or the basic, higher, or additional rates of Income Tax. It is now up to Keir Starmer to keep his word and “ensure that taxes on working people are kept as low as possible” by addressing “unfairness” in the tax system.

Labour has also committed to maintaining the abolition of the Lifetime Allowance, citing the complexity of bringing back the former allowance as a factor.

At The Pension Planner, our team of financial services experts will always stay on top of the latest government news and legislative changes. This reassures you that your plan is always right for you and that it reflects the most recent rules and industry thinking.

If your goals haven’t changed then it’s unlikely that your long-term plans need to

As we have seen, short-term market dips are to be expected and they have already been anticipated – they’re the reason why your pension investment is a long-term proposition.

In a year of more than 60 elections worldwide, ignoring the noise and maintaining a long-term focus is more important than ever.

Remember that the long-term financial plan you hold with us is aligned with your goals, your risk profile and your capacity for loss. It is also risk-managed through diversification.

This means that your funds are invested across asset types, sectors, and geographical regions. A market dip at home, whether as a result of the election or any other global factor, will hopefully be offset by a rise in another region and the same goes for asset classes and industries.

The best way to see your funds grow is to remain invested. That means ignoring the noise and staying unemotional, avoiding the knee-jerk reactions that could see you missing market best days and affecting overall returns.

At The Pension Planner, we review your plan to ensure you remain on track to your goals and we take into account market conditions and any changes to legislation that could affect you. This gives you reassurance and peace of mind that your future is in safe hands, allowing you to enjoy a worry-free present.

Get in touch

If you need help managing your long-term retirement plans, get in touch. Email info@thepensionplanner.co.uk or call 0800 0787 182.

Please note:

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

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