General election: 47% of investors mulling/have made changes to investments

• 15% of investors surveyed have made changes to their investment portfolio, with 32% considering doing so
• Of those who have made changes, 30% said they are holding more money in cash, and almost a quarter (24%) said they are reducing exposure to the UK
• 13% of respondents said that they are considering making changes to their pension strategy, as uncertainty about the pension lifetime allowance lingers.

As the major parties gear up to launch their respective manifestos, interactive investor, the UK’s second-largest investment platform for private clients, has conducted a poll to gauge if Britons are adjusting their investment and pension strategies ahead of the general election (4 July).

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Almost half (47%) of respondents of a poll involving 1,051 visitors to interactive investor’s website on 6 June 2024, said they are either mulling changes to their investment portfolio (32%) or have already made tweaks (15%) with the upcoming general election in mind.

However, 48% of respondents said their investment behaviour hasn’t change.

Of those who have tweaked their portfolios, the largest percentage (30%) said they are holding more money in cash, almost a quarter of respondents (24%) said they are reducing exposure to the UK market, while 13% are taking the opposite approach by investing more in domestic investments.

Only 3% of the sample said they were holding more bonds, while 30% said they were taking another approach.

Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The political noise in the run-up to the general election has been enough to prompt 15% of respondents to our survey to tweak their portfolio, while almost a third are thinking of doing the same.

“However, while the election circus plays out, keeping your investment plan steady and focusing on the long haul is often the wisest approach. Trying to predict market movements around election time is notoriously risky. Markets can swing wildly based on the latest polls or political rhetoric, and timing these fluctuations perfectly is nearly impossible.

“Over time, what truly drives market performance are solid economic principles and corporate earnings, not the short-term noise of political campaigns. 

“So, while it might be tempting to make drastic changes to your portfolio to pre-empt an outcome, those who stay the course often fare better in the long run. The key is diversification - maintaining a well-balanced, diversified portfolio like a well-oiled machine, built to weather all sorts of market storms, including the turbulence that comes with elections.”

Has the potential return of the pension lifetime allowances affected retirement plans?

Whether Labour will bring back the pension lifetime allowance (which was abolished in April this year) if they won the general election has been a prominent feature in the election campaign – although recent reports suggest that Labour has abandoned plans to bring back the cap.

The vast majority of the sample (78%) said they have not made any changes to their pension strategy and are planning to carry on as normal amid the uncertainty over the pension lifetime allowance.

However, one in 10 respondents said they have made changes, with 4% stating that they have stopped or reduced pension contributions, while another 4% claim to have upped contributions, and 2% said they’ve drawn more than usual from their pension.

Another 13% said they are considering making changes.  

Alice Guy, Head of Pensions & Savings, interactive investor, says: “With Labour's potential re-introduction of the lifetime allowance in the headlines, it's great to see that most people are ignoring the political noise and keeping on track with their pension savings and plans. It takes years to build pension wealth so it's vital not to let short-term worries knock your retirement planning off kilter.

“The fact that one in eight are considering making changes highlights the need for long-term certainty when it comes to pensions. There's a danger that pensions become a political football, but it's in everyone's interest to have a strong and robust pension system that encourages long-term financial resilience.”