Pensions and tariffs - what do savers need to know

While the papers will naturally shout ‘billions wiped off pensions’ to grab attention, that doesn’t tell the full story. Yes, markets have reacted sharply to Trump’s surprise tariffs—but this isn’t a financial crisis or a pandemic. It’s a political shock, and markets tend to recover from those far more quickly.

We saw similar market drops during the dotcom crash, the 2008 banking crisis, and the COVID-19 pandemic—yet those who stayed invested in well-diversified portfolios came through the other side unscathed.

It’s unsettling in the short term, but not a reason to panic. For pension savers, the key is to stay focused on long-term goals. Diversification, discipline, and patience still work—even in the middle of a noisy political storm.

And for those still paying into their pensions—which is the vast majority—these market falls are effectively a bargain. Your regular contributions are buying more for less, which can deliver a long-term boost as I'm sure markets eventually recover.

Many pension funds are well diversified so won’t have mirrored the full market downturn. Some fund managers were already underweight equities ahead of Liberation Day, which helped cushion the blow.

First and foremost, it's important to remember that despite the global instability, this isn’t the end of your pension, it’s just the beginning of a more complicated chapter. The UK market in particular, isn’t falling due to changing fundamentals, but is instead capitulating under the weight of a structural repricing in the global market as we enter a potentially post-globalisation world. Furthermore, for those with institutional pension schemes, these are nowhere near as fragile as they may look, with most large schemes having built significant collateral buffers since 2022 and remain in surplus, thanks in part to more substantial funding levels and the decline in liabilities caused by higher discount rates. Additionally, most schemes won’t be forced sellers, as while mark-to-market losses are real, they are not crystallised unless assets are liquidated prematurely, and Trustees can afford to take a long view, if cashflow requirements remain manageable.

Every time stock markets go down, the same emotive phraseology can be seen. It's absolutely natural and human to worry and panic when the values of pensions and investments fall. In our experience, most people aren't worried about their investments - they're worried about what this fall in value means for them, their life and those they love and care about.

However, stock markets declining are a feature of investing, rather than a bug. This is why it's important for any investment decisions to be made within the context of a wider financial plan that builds in what to do during these periods.

For those drawing an income, perhaps it's a good time to consider whether to "turn the tap off" and use other sources to provide income for the timebeing.

For those still building their investments, we're now back to April 2024 prices, so some might consider this to be a good time to buy while things are on sale.

Individual circumstances differ, so this will dictate the best course of action.