Sweeping tariffs introduced by US president Donald Trump have sent global financial markets into renewed turmoil, with UK pensioners now facing potential losses of up to 20 per cent in retirement income.
The warning comes from the Society of Pension Professionals (SPP), which has published new research outlining how defined contribution (DC) pensions are particularly exposed.
The SPP report highlights the knock-on effects of Trump’s economic policies, specifically the market volatility and falling bond yields that have followed his latest protectionist measures.
Market Turmoil Directly Impacting Defined Contribution Pensions
According to the SPP, UK pensioners with defined contribution (DC) schemes are the most at risk from the recent financial turbulence. These pension plans rely heavily on the performance of investments such as equities and bonds, which have been significantly affected by the sharp downturn in global markets.
The informational paper, published in early May, notes that since April 2025, equity markets have undergone a substantial correction, compounded by a drop in government bond yields. This dual hit has eroded the value of pension pots, leaving many DC savers with potentially one-fifth less in projected retirement income.
“It is possible that some DC savers may see a reduction in retirement income of up to 20 per cent,” the report states.
Simon Daniel, Chair of the SPP’s Investment Committee, stressed the importance of long-term planning amid uncertainty. “The world is again enduring a period of financial turbulence and this has naturally created some uncertainty for UK savers and investors,” he said.
He cautioned against rash decisions: “Making significant, reactive changes to pensions and other savings is generally not ideal compared with keeping a cool head and planning carefully.”
Trump’s Policies Fuel Global Economic Instability
The pension concerns follow a broader wave of instability driven by Trump’s tariffs and foreign policy moves during the opening months of his second presidential term. According to Dr Steve Dunne, a researcher at the University of Warwick, Trump’s actions have “devastated – perhaps irreparably – economic confidence in the US.”
The scale of disruption is underscored by data showing that £5 trillion was wiped from US equities in just two days (3–4 April), marking the largest such loss in history.
Dr Dunne adds that long-term trust in the US economy has been weakened, with consequences for the bond market, the US dollar’s global role, and overall investment sentiment.
“Perhaps most significantly, declining global trust will accelerate processes of de-dollarisation and reduce reliance on the dollar as a reserve currency. De-dollarisation would leave the US economically marginalised in a more multipolar global economy.” he noted.
Meanwhile, Trump has faced criticism from within his own party. Former Vice-President Mike Pence, in an interview with CNN, condemned the tariffs for triggering a “price shock” and warned that public pressure could force a shift in White House strategy.
