What you MUST do to protect your pension from Trump's tariffs fallout, revealed by money guru JEFF PRESTRIDGE

Not for the last time, for sure, President Trump has sent the world into a frenzy like one of those wooden or plastic spinning tops we were given for Christmas as youngsters.

Be it east or west, Europe or the UK, Trump’s imposition of tariffs on countries far and wide has caused widespread consternation and indignation.

Although it can be argued that the UK has got off lightly with tariffs of 10 per cent applied to most goods exported to the United States (China has been hit with an equivalent 34 per cent charge), the portents aren’t good. Ominous, scary – more frightening than a Stephen King horror book.

Job losses look likely, especially in the UK steel and car making industries where premium 25 per cent tariffs apply.

Some of the companies behind the country’s most iconic (and successful) brands will be hit hardest as their ability to export to the US is compromised: the likes of AstraZeneca, BAE Systems, Burberry, Diageo, Jaguar Land Rover, and Rolls-Royce. The creme-de-la creme of UK plc.

It’s all so worrying that Sir Keir Starmer called in business leaders at the crack of dawn on Thursday to discuss the tariffs.

‘I’ve instructed my team to move further and faster on the changes I believe will make our economy stronger and more resilient,’ Sir Keir said. For the time being, no mention of miracles, but they could well be needed to steer the economy from plunging into recession.

Yet, it’s not just business and economic fallout in the UK that we should fear as a result of Trump’s wish to end his country’s ‘economic surrender’ to ‘foreign scavengers’.

It’s also any adverse impact Trump has on our long-term wealth: our share portfolios, our Isas and, most importantly, our pensions – the key to a financially sweet retirement.

So far, stock markets worldwide have not liked Trump’s protectionism one little bit. Equity prices in Japan and wider Asia all fell sharply in response while the FTSE 100 Index dropped by more than 1 per cent. When the S&P500 Index opened trading on Wednesday, it plunged more than 4 per cent.

Yes, it is early days, and such falls are not catastrophic – and, of course, we also can’t rule out any Trump U-turns.

But stock markets are likely to remain nervous for the foreseeable future as they digest the impact of the tariffs on listed businesses.

It is a view shared by Doug Brodie, chief executive of Chancery Lane Retirement Income Planning. He believes markets worldwide will remain ‘volatile’ for at least the remainder of the year.

For pension savers, the response to Trump’s tariffs should be calm and measured, especially for those where retirement is a long way into the future (much longer than the President will remain in the White House).

For those who contribute into a pension set up on a defined benefit basis, there is no need for alarm.

These schemes, a rarity among private companies but commonplace in the public sector, are tightly regulated – and are run conservatively in order to meet their obligations: namely, paying members a retirement income based on a mix of years at the coal face and their salary (final, career average or something in between).

‘Market shenanigans have no impact on these lucky people,’ says Brodie.

It's those who save into a defined contribution (DC) pension fund that need to do some thinking: reassessing whether their pension is set up to meet their retirement dreams.

The success of these plans depends on how much is contributed and the performance of the underlying investments. They come in two forms.

They can be set up by yourself, usually as a self-invested personal pension (SIPP), and you then determine what goes into the pot: shares, bonds, or investment funds. They are popular with the self-employed and those who like to manage their pension portfolios.

But the biggest form of DC fund is the workplace pension where contributions are made monthly by both you and your employer.

In most cases, workers’ money is invested into a ‘default fund’ managed by an external fund manager – although you can request to invest in other funds offered by them. Default funds invest in shares, bonds, and other assets such as gold.

For EVERYONE currently investing into a DC plan (SIPP or workplace), the big ‘must’ is to keep on contributing.

Why? You get the boost of tax relief on your contributions (minimum 20 per cent). In the case of a works pension fund, you also benefit from your employer putting money into your plan. Free pension funding.

Laith Khalaf, head of investment analysis at trading platform AJ Bell, says: ‘Pensions are long-term savings vehicles and market gyrations are part of the journey.

‘Buy, hold and take comfort in the fact that your monthly payments will pick up more shares and funds at cheaper prices when markets fall.’

Yet, while continuing with contributions makes sense, NOW is also a good time to take stock of how your plan is invested.

For holders of SIPPs, diversification is key. That means exposure to shares, bonds, and alternatives such as gold. ‘Diversity will temper the impact of the current volatility in stock markets,’ says Jason Hollands of wealth manager Evelyn Partners.

Asset allocation will also depend upon your attitude to investment risk – and the time you have left until you wish to access your fund (currently, the earliest you can touch it is when you hit 55 – rising to 57 from April 2028.

The shorter that time period, the less risk you will likely want to take.

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By way of example, Victoria Hasler of investing platform Hargreaves Lansdown, says a ‘cautious’ saver would probably want some 60 per cent of their fund in bonds – the rest in UK overseas equities.

Meanwhile, an ‘adventurous’ saver (maybe with time on their side) would want more money in equities (a tick over 10 per cent for UK equities, just short of 80 per cent overseas).

She adds: ‘As you get closer to accessing your pension, de-risk it by moving it into cash.’

For those with workplace pensions sitting in a default fund, now is a good time to find out the asset split and see whether you are comfortable with it.

Most default funds reduce investment risk for employees by changing the asset mix with age.

John Greenwood, editor of magazine Corporate Adviser, says two of the biggest default funds are Aviva’s My Future Growth and Legal & General’s Target Date Fund. Between them, they have pension assets of £50billion and nearly 3million members.

The asset mix of these funds for someone with 30 years left until they hit state pension is as follows. For Aviva, 22 per cent bonds; 5 per cent (UK equities); 73 per cent overseas equities. The equivalent figures for L&G are 12, 5 and 73 – with the balance in property and infrastructure.

For someone with just five years to go, the asset mixes are more bond oriented.

For Aviva, 61 per cent in cash and bonds, 3 per cent in UK equities and 36 per cent in overseas equities. For L&G, the respective figures are 48, 2, 21 and 29 per cent in other assets.

Greenwood says: ‘Workplace pension defaults, with big exposures to equities, tend to perform better than those with a more balanced asset mix. But when markets fall, balanced funds tend to suffer lower falls.

‘If you think your default fund is being held back by a cautious investment strategy, you can switch. Most workplace pension providers offer a range of alternative investment options.’

Finally, if you need one more reason to keep paying into your pension fund, think Rachel Reeves.

Come the autumn Budget, when the country’s finances are in near tatters, she might well take a sword to tax relief on pension contributions.

Enjoy its boost while it’s still around.