Pension funds and savers are being advised to stay calm, avoid rushing into decisions, and focus on long-term goals, following the recent market turmoil caused by the US tariff announcements.
The tariffs triggered a market drop, with stocks falling, bond rates rising, and gold losing value. While there’s been some recovery, uncertainty remains due to ongoing trade tensions and economic pressures.
Quantum Advisory advises pension schemes to stay invested, maintain a balanced mix of assets, and avoid making sudden changes. Market ups and downs can create opportunities, but trying to time the market is risky. Selling too soon or moving to cash might result in missing out when things bounce back.
Aon recommends individual savers continue regular contributions, especially in defined contribution pensions, as downturns can lead to better long-term growth, and those nearing retirement should consult a financial adviser to stay on track.
Both firms also warn about scams. Uncertain times can attract fraudsters promising early access to pensions or unrealistically high returns. Savers are urged to be cautious and rely on trusted advice before making any changes.
Quantum Advisory principal investment consultant Paul Francis says: “Following the announcement of the tariffs, global markets took a significant hit. The sharp and rapid decline signals a substantial shift towards a new economic order. While this downturn is likely solely attributable to the tariffs, some analysts argue that the decline began earlier this year, triggered by DeepSeek’s open-source AI model. Perhaps that was only the embryonic phase of what now appears a full-on trade war between the two superpowers.
“Regardless, we now face the consequences, and schemes need to consider their options, particularly with regards to equity market diversification and positioning. The equity relief rally seen last night followed the US pausing the punishing rates of ‘reciprocal tariffs’ it imposed on countries other than China. It comes as a welcome development for many. But fear of what comes next remains.
“Higher tariffs erode international competitiveness, which in turn reduces global trade. This leads to job losses, rising prices, and a slowdown in economic growth. Here in the UK, the new tariffs have already wiped out the modest fiscal headroom projected in the Spring Statement. As a result, the Chancellor may be forced to break fiscal rules, potentially leading to higher taxes and/or spending cuts.
“It’s going to take a while for the global market to adapt and, as with all thing’s investment, things could still change – both positively or indeed negatively – and quickly. Volatility of returns is high, which isn’t necessarily bad, as it presents opportunities for profit. However, being on the wrong side of a trade can be costly. Making drastic changes to investment strategies based on recent developments would be a bold move. Now is not the time for major shifts. Uncertainty affects all asset classes, and there’s no clear safe haven. Bond prices may fall further, and moving to cash could lock in losses and miss potential gains in equities. For those considering asset class transitions, proceed with caution. The risk of being out of the market is significant, especially with markets moving 5 per cent in a single session. Pension funds should lean heavily on their advisors in this time.”
Aon partner in DC investment Chris Inman says: “There have been high levels of uncertainty in global equity markets since the start of April. While there have been some periods of relative stability within the overall unrest, we do not expect this to be the end of volatility in investment markets.
“It all underlines key things for DC members to remember: The ups and downs of markets, while uncomfortable, are a normal part of investing. DC pension savers and those running pension schemes, should generally be focusing on the long-term. That is, they should not solely focus or make decisions based on short-term market movements. It is important for DC savers who are close to retirement and planning on accessing some or all their pension fund, to consider the potential short-term impact of recent market volatility on their plans. Before taking action, it’s likely to be beneficial for them to speak to a financial adviser for guidance that is specific to their situation.
“It’s also important to highlight that, over time, we expect markets to recover from the recent volatility. It is also well worth remembering that as markets recover, pension savers who are making regular contributions will be invested at more attractive prices. This might seem counter-intuitive but can lead to greater long-term returns.
“For DC savers who are closer to retirement, one bright spot is that diversification, especially through short-dated government bonds, has been beneficial. Values have generally held steady or increased during the equity slump of the past few days. We haven’t seen this negative correlation between bond and equity price movements – and to this extent – since the COVID-19 crisis-hit markets.
“Pension schemes and employers should encourage their savers to be cautious with the funds they have built up for their retirement. They should also signpost them to the Pension Regulator or FCA guidance on avoiding scams.
“Whatever the circumstances, the key message to savers is not to rush into decisions affecting their long-term savings, based on short-term market volatility. And, if in doubt, seek professional advice.”
