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BREXIT: Immediate focus for pensions must be on volatile markets, says expert

Pension trustees' immediate focus after the UK vote to leave the EU should be on market volatility and measures to mitigate against it, said pensions expert Alastair Meeks of Pinsent Masons, the law firm behind Jun 2016

This is part of Out-Law's series of news and insights from Pinsent Masons experts on the impact of the UK's EU referendum. Watch our video on the issues facing businesses and sign up to receive our 'What next?' checklist.

"Trustees should focus on what might matter straight away, which is the markets, and not on legislative and regulatory change, which will take some time to get going," Meeks said.

"Markets react quickly, and economists predicted varying levels of market volatility following a vote for Brexit. Pension scheme trustees need to review their medium-term investment strategy and consider whether there are any sensible things they can do to mitigate against volatility. They should also seek to understand as an early priority the impact on the employer's business," he said.

It would take at least two years for Brexit to be implemented following a vote to leave, and it is unclear how pensions law and regulation will eventually change, Meeks said. UK prime minister David Cameron said that that process would not be triggered before October, when he will step down in favour of a new prime minister.

"As far as legislative and regulatory change is concerned, trustees need only adopt a watching brief until government policy becomes clear. The government will need time to decide what elements of EU law are worth retaining, and what can be overhauled," he said.

"Trustees shouldn't mistake the interesting for the urgent," Meeks said.

Meeks said that the UK leave vote throws “an interesting sidelight” on the recent decision by the European Insurance and Occupational Pensions Authority (EIOPA) to stop work on a single EU-wide pensions solvency regime.

"If EIOPA had introduced a regime that increased UK pension scheme deficits at a stroke by £253 billion, you can imagine how this would have played out with the British public. The British press made much of the potential impact. This is irrelevant now that the UK has voted to leave the EU."