What would Brexit mean for your pension?
As David Cameron very publicly negotiates with Europe, commentators are keen to claim that Brexit is either the best possible move for the country - or the end of the world as we know it. But while we endure endless political debates, there are plenty of people busy wondering what the European vote (and the result) will mean for their investments - including their pension.
The vexed debate over whether Britain will stay or go has plenty of time left to run. Overwhelmingly at the moment professional investment managers think Britain will stay within Europe, but there can be no guarantees.
With that in mind - and given that the markets hate uncertainty - there are concerns that whatever voters decide could cause upheaval in the markets - and damage their investments.
One of the country's most respected fund managers finally published his review into the possible impact of Brexit this week, and the results offer some hope. Woodford Investment Management, headed by Neil Woodford, concluded that as the vote approaches, markets will get jittery, so we could see some sharp falls that could look fairly troubling.
This matches predictions from Rathbones that UK share prices will remain under pressure until there is clarity on whether Britain's future is going to be inside Europe or not.
However, Woodford says that once the decision is made, regardless of whether Britain choses to stay in Europe or leave, it will be business as usual for your investments.
Business as usual
The report says that the more extreme claims regarding the costs or benefits of Brexit are "wide of the mark and lacking in evidential basis". It says that although it could have a small impact on growth and job creation, it's more likely to have a small overall beneficial effect because of lower regulation, more freedom to make trade deals and savings for the government. Although it added: "In each of these areas, we do not believe that the benefits of Brexit would be huge, but they are likely to be positive."
The report states: "Although the impact of Brexit on the British economy is uncertain, we doubt that Britain's long-term economic outlook hinges on it. Things have changed a lot since 1973, when joining the European Economic Community was a big deal for the United Kingdom." It concludes: "We continue to think that the United Kingdom's economic prospects are good whether inside or outside the European Union. Britain has pulled ahead of the European Union in recent years, and we expect that gap to widen over the next few years regardless of whether Brexit occurs."
This reflects comments from Michael Clark, portfolio manager of the Fidelity Moneybuilder Dividend Fund and Fidelity Enhanced Income Fund, who said that: "If Britain withdraws, but follows Norway and remains within the European Economic Area (EEA), the free trade area and the Single Market, there won't be any real change to the way the economy works and interacts with our main trading partner. Changes may take place longer-term as the UK no longer adopts new legislation, but the effects of this cannot yet be determined."
What should you do?
Laith Khalaf, Senior Analyst at Hargreaves Lansdown says that all this means "Investors shouldn't make decisions about their savings based on whether they think we will end up in or out of Europe. It's infinitely more productive to simply spend time considering the basics of investing, such as how much to save, how much risk to take, and how to pick the best investments for your circumstances."
"Investors who let the chance of a Brexit determine their investment portfolio will probably find themselves flipping their portfolio around depending on the prevailing polls, and almost certainly won't do themselves any favours in the long run."
But what do you think? Will we stay in Europe or go, and what will it mean for the country? Let us know in the comments.