The impact of the upcoming UK Budget and US election on pensions and investment markets was a key focal point at Quantum Advisory’s latest event.
Finance, HR and pension professionals came together on 22 October to hear exclusive industry insights and market updates at the firm’s pension and investment breakfast seminar at the Celtic Manor Twenty Ten Clubhouse.
Dan Redwood, a senior investment consultant and actuary at Quantum Advisory, opened the event with an overview of macroeconomics, gilts and equity markets in Q3 and considerations for investors amid the changeable global political landscape. Dan identified four short to medium term risks for markets including political risk, a hard landing following growth, equity markets and the potential for global conflicts to escalate.
Dan said: “Elections and the direction of government policy could disrupt markets. Ahead of the Budget, the chancellor has said that growth is the challenge and investment is the solution. The chancellor has three levers to try and achieve this while balancing the books: through tax rises, more borrowing and spending cuts, all of which seem likely. Fiscal rules may have to be changed to accomplish this goal and the country’s fiscal position is likely to get worse before it gets better.
“Meanwhile, the outcome of the US election will define its economic agenda. Trump’s plans include tariffs on imports, tax cuts and spending on immigration control, while Harris’ proposals feature increased spending on healthcare, childcare and housing in addition to tax increases focused on the wealthy. The plans of both candidates are set to increase the national ten-year debt and their ability to enact policy will depend on the balance of power in the Senate and Congress.”
James Bird, a consultant at Quantum Advisory, also touched upon the pension measures speculated to appear in the Budget such as tax relief, a reduction in the amount that can be taken as a tax-free lump sum, the introduction of national insurance on employer contributions to workplace pensions and the introduction of tax on some death benefits.
James said: “The government is continuing to explore reforms to help workplace pension schemes take advantage of consolidation and scale to give better value for members and boost growth, but there could be painful rises in taxes in the Budget next week to help fund the reported ‘black hole’ in the UK’s finances.
“In addition to exploring new options such as collective defined contribution schemes which have recently been introduced in the UK and reviewing pension outcomes, another exciting development in the pensions landscape is the new defined benefit funding code of practice. Fast track and bespoke approaches to scheme journey plans and strategies are valid in the new code as long as they can be justified to the Pension’s Regulator.”
Joining the two speakers from Quantum Advisory was Lawrence Davies, the Wales partnership manager at the Money and Pensions Service (MaPS), who provided an update on how MaPS can support employers.
As an arm’s-length-body, sponsored by the Department for Work and Pensions, MaPS’ vision is “everyone making the most of their money and pensions”.
Alongside its core five functions – pensions guidance, money guidance, debt advice commissioning, consumer protection and strategy – MaPS also coordinates the UK Strategy for Financial Wellbeing, working with partners and stakeholders to help everyone find a way forward and build a better financial future.