‘My pension has plunged £120k because of Trump's tariff war'
Donald Trump's tariffs have reset the international economic order – and caused havoc in the financial markets.
Pensions and Isas, the bedrock of most people's personal finances, are largely invested in the stock market. Millions of us will have seen our investment portfolios shrink gradually over the past week and then sharply this morning.
London-listed shares dropped 6pc before recovering slightly. The real test will come when the New York market opens this afternoon.
One Telegraph Money reader, Michael Stansfield, has watched his pension fall in value by £120,000. He will not be alone.
Financiers are now pricing in the costs of a 'global recession', with the FTSE 100 plunging this morning to a one-year low. The Dow Jones is down more than 10pc over the past month.
The hit will shave £22bn – or 0.8pc of GDP – from the UK's economy, accountancy firm KPMG warned.
The markets swings will hit savers in all sorts of ways, with pension pots hammered by the dips. Among those who should be most worried about the market fluctuation are those who are preparing to retire imminently, with experts advising patience and diversification.
Those close to retirement typically value stability over risk – a pension pot suddenly dropping by 20pc six months before finishing work would be a nightmare scenario.
Mr Stansfield, whose pension fell by more than £120,000 since the start of the tariff wars, is 49 and plans to retire within a decade. He said he would be worried if he was approaching retirement in the next few months, but he is confident he can ride out the market turmoil.
He said: 'When we have such big falls in the stock market it is unnerving, but we have all been here before. Every time the market comes back, and I don't see anything different this time around.'
Mr Stansfield added: 'If I was to retire in the next few months, I might be feeling a twinge. But what this teaches us is that in the five years' run-up to retirement, you've got to start to think about converting the equites into some bonds or cash so that you can ride out any major drops in equity prices.
'I'm 50 this year, so young enough to ride this one out again, but my plan is to retire somewhere between 57 and 60. After the next recovery, I will start to look to put some money into bonds around the age of 54 or 55.'
Another Telegraph Money reader, aged 66, said his pension pot had dropped by 12pc over the weekend. In response, the pensioner has moved some of his investments into Isas.
He was pessimistic about the chance of quick improvements, and said: 'My own view is that this is not a short term 'blip' but a herald of a longer term depression. Who knows whether Trump will backtrack on the tariffs?
'But the damage in confidence has already been made and the changes to the economic order are likely profound and unprecedented.'
The pensioner said that he had a small workplace pension on top of his state pension, and that he has chosen to use Isas to invest rather than a self-invested personal pension (Sipp).
He said: 'As a retiree, I invest mainly for income and as long as my dividend income is relatively unscathed it matters not to me how my equities are valued.
'Having said that, few investors can avoid the consequences of a global recession unless one is skilled in the use of derivatives and I am not one of them.'
Pension experts said that the market movements proved the value of having a diversified portfolio, and added that, for most, there was no need to make panicked decisions in the immediate future.
Sir Steve Webb, a former pensions minister and partner at LCP, said: 'The current turbulence in markets is a reminder of the value of diversification when it comes to investing.
'Whilst focusing on a limited number of assets in a limited number of markets, such as US tech stocks, would have served people well in recent years, recent events are a reminder that there is no such thing as a one-way bet in investing.'
Tom Selby, of provider AJ Bell, said: 'For those planning to buy an annuity, the aim of the game is usually de-risking by shifting towards bond investments that act as a hedge against annuity rates.
'If you stay exposed to stock markets, you'll also be exposed to volatility, such as we've seen recently as a result of the Trump tariffs, which could blow your retirement plans off course.'
He added: 'For those planning to stay invested for the long-term through drawdown, provided you are comfortable with the risks you are taking and your overall long-term strategy, there should be no need to make panicked decisions based on day-to-day events, the outcome of which remains highly uncertain.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Guardian
13 minutes ago
- The Guardian
Anger over Shell $4.3bn profits; Rolls-Royce earnings soar 50%
Update: Date: 2025-07-31T07:10:32.000Z Title: FTSE 100 Content: European stock market indices have risen on Thursday morning. The dipped in the opening trades in London, but a few minutes later it is up 0.2% – helped by a big 10% gain for Rolls-Royce after its latest profit upgrade. Here are the opening European snaps, via Reuters: EUROPE'S STOXX 600 UP 0.15% GERMANY'S DAX UP 0.32% FRANCE'S CAC 40 UP 0.1%; SPAIN'S IBEX UP 0.98% EURO STOXX INDEX UP 0.24%; EURO ZONE BLUE CHIPS UP 0.29% Update: Date: 2025-07-31T07:02:49.000Z Title: Shell's $4.3bn profits raise anger; Rolls-Royce adds £400m to earnings forecast Content: Good morning, and welcome to our live coverage of business, economics and financial markets. It is a bit of a barrage of company earnings today, led by FTSE 100 oil company Shell. Shell reported adjusted earnings of $4.3bn (£3.2bn) for the second quarter of 2025, better than the $3.7bn expected by analysts – albeit lower than the $6.3bn it reported the same time a year ago. Nevertheless, it was the 15th consecutive quarter that the oil company has returned more than $3bn to shareholders via buybacks – with another $3.5bn added today, plus dividends of $2.1bn. The almost four-year shareholder bonanza was a period that included the aftermath of Russia's invasion of Ukraine, which sparked a global energy crisis that was damaging to household finances – but hugely profitable for oil companies. Shell's profits sparked anger among environmental campaigners, after the company last year rolled back decarbonisation targets. Robin Wells, director of Fossil Free London, a campaign group that protested outside Shell's headquarters last night, said: We are now in a new normal of record-breaking heat, created by corporations like Shell. This will mean devastation and mass loss of human life. Climate scientists have warned us that this new normal will spell the end of human civilization by 2100. It's time for destruction to stop raising billions in profit. Rolls-Royce is another company that has delivered huge returns to shareholders with a turnaround plan that has been helped by the recovery of air travel since the coronavirus pandemic. The jet engine manufacturer said underlying operating profit rose by 50% to £1.7bn for the first half of 2025, with a profit margin of 19.1%. The manufacturer, whose main operations are in Derby, raised its profit forecast for the year from a range of £2.7bn-£2.9bn to £3.1bn-£3.2bn. It has also been helped by the huge boom in weapons spending since Russia's invasion of Ukraine; Rolls-Royce makes jet engines for fighter jets. 10am BST: Eurozone unemployment rate (June; previous: 6.3%; consensus: 6.3%) 10am BST: Italy inflation rate (July; previous: 1.7%; consensus: 1.5%) 1pm BST: Germany inflation rate (July; previous: 2%; consensus: 1.9%) 1:30pm BST: US core personal consumption expenditures inflation rate (June; previous: 0.2%; consensus: 0.3%)
Reuters
42 minutes ago
- Reuters
Praise Trump and speak simply: How the South Korean team negotiated its trade deal
SEOUL, July 31 (Reuters) - The South Korean ministers tasked with negotiating a last-ditch trade deal with U.S. President Donald Trump said that to prepare they role-played and solicited tips for engaging with the unpredictable leader. Among the advice they received? Call Trump a "great person" and speak as simply as possible, Industry Minister Kim Jung-kwan told reporters in Washington after the deal was announced on Wednesday. The stakes were particularly high for South Korea, a major export-driven economy, and Kim and other members of the delegation have only been on the job for a few weeks after President Lee Jae Myung won a snap election in June. Kim called Trump a "master of negotiations" and said each of the team, which included Finance Minister Koo Yun-cheol and Minister for Trade Yeo Han-koo, took turns role-playing as the U.S. president to prepare. "We tried to talk like President Trump, and President Trump's way of talking is very terse and straightforward," Kim said. "We prepared a lot of scenarios on our own on how to answer this or that question." Koo said the team only knew for sure they would be meeting Trump when they saw it on social media. The meeting itself went for about half an hour and the two sides went back and forth on the amount of the investment fund, which was eventually settled at $350 billion, Koo said. "We collected a lot of negotiation strategies used by our counterparts in advance and thought a lot about how to respond, so the negotiation was very smooth," he said. Yeo quoted Trump as saying his personal involvement is rare in dealing with officials who are not heads of state, and means "he respects South Korea very much and attaches great importance to South Korea." Earlier in the talks the U.S. had pressed South Korea to lift restrictions on imports derived from cattle older than 30 months, but Yeo helped defuse that by showing the Americans a photo of massive protests that occurred years ago over concerns about mad cow disease. "I think it helped them to understand the situation in Korea," Kim said.
Telegraph
an hour ago
- Telegraph
How much Labour's foot-dragging is costing your retirement
Labour promised a wide-reaching pensions overhaul in its election manifesto to improve the nation's financial security in retirement. True to its word, just a month after its landslide victory, a comprehensive two-part review was announced. Eyebrows were quickly raised, however, as phase one rolled out and it became clear the overhaul was more about generating economic growth for the Government than boosting savers' returns. Even when phase two was finally outlined earlier this month, the review shunned any immediate action and instead set up a Pensions Commission. It will take around 18 months to report back on how to tackle key issues like savings rates and auto-enrolment – the mechanism that signs workers up for a pension unless they opt out. In the meantime, ministers have confirmed that a major pillar of the reforms – the amount which savers and employers must contribute – will not increase this Parliament. It's a decision that could cost workers six figures by the time they stop working. With a fifth of Britain's 15 million pension savers on course to retire in poverty, and reliance on the state pension increasing, Telegraph Money teamed up with Hargreaves Lansdown to explain how much Labour's delays could cost you in retirement. Workers Cost to pension pot: £106,000 Under the current rules, workers must be automatically enrolled into a pension if they earn at least £10,000 and are aged between 22 and state pension age. In return for a 5pc minimum contribution from the employee, their employer must add at least 3pc. There are widespread calls from experts to increase both minimum saving rates to 6pc. With any changes ruled out for this Parliament, however, this now won't happen for at least four years, and any eventual progress is expected to be gradual. According to Hargreaves Lansdown, a 22-year-old earning £23,500 and putting 8pc into their pension until age 68 would have an eventual pot of £213,000. But if the rates were increased to 12pc overall, they would have £319,000 – meaning they would miss out on £106,000. Self-employed Cost to pension pot: £160,000 Self-employed people are not currently automatically enrolled into a pension, leaving many to fall through the cracks and at risk of struggling in retirement. In fact, researchers Nest Insight recently found that just 18pc of self-employed people pay into a pension, despite three quarters saying they want to. If they were automatically enrolled, a self-employed person earning £23,500 would contribute the minimum 5pc, since there is no employer to pay in. If they did this from age 22, they would have £133,000 in their pot by age 68. If the rate was increased to 6pc, their pot would hit £160,000. Young people Cost to pension pot: £39,000 If workers aged between 18 and 22 were automatically enrolled, it could put tens of thousands more into their pension pot. The legislation for this change has already passed but has yet to be enacted. A young worker on the minimum wage working 40 hours a week would currently be paid £20,800 a year. If the age of auto-enrolment was lowered to 18, they would have an extra four years of pension contributions, meaning their pot would hit £7,000 by age 22. Given the long period it would be able to grow for, that amount would be £26,000 by the time they retired. If the minimum contribution rates were also increased to 12pc, this would be £39,000. Low earners Cost to pension pot: £4,000 Anyone earning at least £6,240 is allowed to join a pension scheme. However, they are not automatically enrolled, nor does their employer have to pay in, until their salary passes £10,000. This also hits people with multiple low-paying jobs, as they still wouldn't be enrolled into a pension for any roles paying below £10,000 – even if their combined earnings were higher. If someone earned £9,000 at age 22 and increased their earnings by 3pc a year, they wouldn't cross the £10,000 threshold until age 26. Missing those four years of paying in would leave them with a pension pot of £77,000, rather than £81,000. There are calls to remove this lower earnings limit, which was also included in the legislation passed and is yet to be put into effect. Susan Hope, of Scottish Widows, said: 'Lowering the age to 18 and removing the lower earnings limit could be absolutely transformative for young people. 'It would move them from a retirement of having no car, takeaways and foreign holidays towards one with more financial freedom and choice – without having to rely on other people.' Helen Morrissey, of Hargreaves Lansdown, said: 'Changes to auto-enrolment contribution levels have the potential to transform people's retirement outcomes. However, there is nuance – if the contribution limits are raised across the board there is potential for lower earners to put themselves in financial difficulties today because they are contributing more into their pensions. 'More widely, what the Pensions Commission has shown is that there are a lot of people under-saving for retirement and not heading for the income they want or need. The commission has the potential to have an enormous impact on these people's retirement security.' The Department for Work & Pensions said Liz Kendall, the Work and Pensions Secretary, had addressed the rationale behind the timings in a speech. She said: 'Cost of living pressures mean many workers are more concerned about putting food on the table and keeping a roof over their heads than saving for a retirement that seems a long, long way away. And many businesses face huge challenges in keeping profitable and flexible in an increasingly uncertain world. 'That's why we have already said there will be no change to minimum auto-enrolment contribution rates during this Parliament.'
