Defined contribution (DC) pension savers could see their potential retirement income fall by up to 20 per cent as a result of market volatility seen following the introduction of US tariffs, although those in defined benefit (DB) schemes are unlikely to be affected, research from the Society of Pension Professionals has revealed.

The SPP acknowledged that, in the wake of US President, Donald Trump, announcing new import taxes on goods from almost every country, the economic turbulence felt across the world has been substantial.

It suggested that, against this backdrop, it was "perfectly reasonable" for those saving in a pension, and those already in receipt of a pension, to ask how such events may affect them
here in the UK.

However, it reassured savers that those in well-funded private DB pension schemes can be confident that their retirement incomes will probably be unaffected.

Likewise, it said that those in a Local Government Pension Scheme (LGPS) fund are unlikely to see any impact on their retirement income because their benefits are guaranteed, although it acknowledged that many LGPS funds will have significant growth allocations, admitting that, for those funds, the impact may be significant.

However, the report suggested that the biggest impact will be for those saving into a DC scheme and approaching retirement, noting that whilst people about to retire with DC schemes will have less invested in equity markets, there will be some with a substantial proportion.

"Given the scale of the equity market falls since early April 2025, and the fall in government bond yields, it is possible that some DC savers may see a reduction in potential retirement income of up to 20 per cent," the report stated.

"Given the speed and volatility of such moves, those individuals may decide to delay taking their pension where possible."

However, the SPP clarified that whilst this may be a sensible step if markets are to recover in the short term, "unfortunately nobody knows if a short-term recovery is likely".

Given this, the organisation stressed the need for savers not to panic, emphasising that pension investments are designed for the long-term and are frequently subject to bumps in the road.

"It therefore makes sense for government and the pensions industry to remind UK adults that making significant, reactive changes to pensions and other savings generally leads to poor outcomes, compared to cool heads and careful planning," the report continued.

"The current volatility serves as a reminder of the importance of regular, long-term saving
into a pension across a diversified portfolio of investments.

"Diversification of assets adds genuine value through risk mitigation. Consequently, steps that limit investment freedom can be unhelpful.

"Just as falling markets can provide challenges if you need to sell, they can also provide opportunities for investment targeting long-term growth.

"The challenge is how individuals can adapt their portfolio as they near retirement – a challenge that the pensions industry is continuing to tackle."

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