British pension savers set to benefit from Trump’s pro-business policies

British pension savers stand to gain from Trump’s pro-growth policies as US markets surge, boosting funds invested in American assets. Meanwhile, Rachel Reeves’s proposed pension reforms aim to create £80bn “megafunds” to drive UK investment. Read more: British pension savers set to benefit from Trump’s pro-business policies

Nov 24, 2024 - 11:00

British pension savers set to benefit from Trump’s pro-business policies

Liz Truss has been forced to abandon plans to raise pensions by average earnings alone next year, which could have saved the government as much as £5 billion a year.

British pension savers are poised to gain from Donald Trump’s election victory, as the former US president’s pro-business stance boosts stock markets, particularly in the United States.

Andrew Evans, group chief executive of Smart Pension, a leading UK retirement business, highlighted the positive impact of rising US markets on UK pensions with investments in American assets.

Evans said, “American markets have been incredibly bullish since Trump’s victory, benefiting UK pension savers with funds tied to US assets, whether they realise it or not.”

Smart Pension, which manages retirement savings for 1.4 million people, has 52% of its main fund invested in the US. Following Trump’s election, the S&P 500 surged by 5% to a record high of 6,001.35 points. Although it has since dipped slightly to 5,863.69 points, the index remains 2.6% higher than its pre-election level and up 12.8% since August. Similarly, the Nasdaq Composite Index hit record highs and is still up 2.6% compared to November 4.

Despite concerns over Trump’s trade policies, which some economists warn could disrupt global markets and fuel inflation, investors remain optimistic about his corporate tax cut promises and pro-growth agenda. Evans noted, “Trump’s policies promoting American growth and company assets will benefit global pension funds.”

Rachel Reeves pushes for UK pension reform

Meanwhile, in the UK, Chancellor Rachel Reeves has proposed a significant overhaul of workplace pensions, aiming to pool smaller pots into “megafunds” worth £80 billion. These larger funds are expected to have the capacity to invest in a broader range of assets, driving growth and returns for savers.

Evans welcomed the initiative, which aligns with Smart Pension’s mission to transform retirement savings. The company currently allocates 6% of its master fund to private markets and plans to increase this investment.

However, Evans called for further government incentives to stimulate domestic growth, particularly in light of the Chancellor’s £41.5 billion in tax hikes outlined in the Budget. “Promoting growth while imposing significant tax increases is a challenging balance. Additional structural measures are needed to support investment in the UK,” he said.