Global conflict and skyrocketing energy costs have sent a chill through the markets, but is your pension actually at risk? DAVID GRANAHAN, Pension Consultant, CPAS, explores the resilience of global equities in the face of the US-Iran conflict and why a “retirement glidepath” is your best defence against short-term volatility

Escalation in the Middle East is the latest conflict to influence financial assets. Despite wars like this casting a cloud of fear and uncertainty, it does not actually indicate whether asset prices will rise or fall. For all intents and purposes, the Russia-Ukraine War demonstrates that regional conflicts can cause short-term jitters that do not necessarily bring down global capital markets in the long run. Global equities (stock markets) have actually advanced since Russia invaded in 2022, as shown in the table below.

Performance of the FTSE All-World Equities ETF (VWRL)

2022	-13.61%
2023	+18.06%
2024	+25.57%
2025	+8.40%

However, right now, we do not know whether the US-Iran conflict will last weeks, months or years. Or what long-term damage it could cause.

What we do know is that the Strait of Hormuz – a key transport route for one-fifth of the world’s oil and gas – has more or less come to a standstill. Oil tankers fear of being attacked, and marine insurers have begun cancelling policies altogether. To make matters worse, oil fields and refineries are now actively being targeted by both sides. This is bad news for major economies that rely on oil imports, including India, China, Japan, South Korea, and Europe.

Unsurprisingly, energy costs have skyrocketed here at home in Ireland, and based on current developments, prices at the pump will likely remain elevated for the foreseeable.

The price spike is untimely for EU member states, having just signed regulations to prevent the importation of Russian gas, with major fines for countries attempting to breach or circumvent the rules.

Market snapshot

• Volatility in global stock markets
• Brent crude oil is up 50% since February.
• Diesel is over €2.00 per litre.
• Home heating oil prices are over €900 per 500L in some counties (80% increase from February)
• Tourism/travel industry hit (rising costs/travel fears)

 

What is next for markets?

Expect fluctuations until the market has clarity. With the exception of escalation toward a World War, which, to be clear, is NOT my base level expectation, volatility from geopolitical events is to be expected from time to time. While markets dislike uncertainty, they tend to rebound over the long term.

From a humanitarian point of view, we can only hope for a swift resolution, regardless of the effects on financial assets.

 

Government tax breaks

As for the here and now, businesses and consumers are going to feel the pinch, especially in construction. As of writing, the government has brought in new temporary measures:

• €0.20 cut for diesel
• €0.15 cut for petrol
• €0.02 cut for home heating oil
• Rebate of up to €0.12 per litre for haulage companies (Jan 1^st, 2026, to June 30^th, 2026)
• Extension of the means-tested fuel allowance payment

The Minister for Justice, Jim O’Callaghan, has said that measures will be “targeted at individuals that need them the most”.

How does this all affect your pension

The vast majority of pension scheme members are invested in a “multi-asset strategy.” As the name suggests, funds are invested in a broad range of assets across different industries and geographies. By design, this makes sure you have appropriate exposure to assets of many types that aim to:

1. Generate an investment return for your pension over the long run and
2. Spread risk so you are not overexposed to any one area of the market.

Put simply, it is a balancing act. The asset classes that perform well will counteract the asset classes that perform poorly. So, whether bonds, gold, oil, or technology stocks move up, down or sideways, the aim is to find an average return from the lot. All the while, managing downside risk.

 

For those nearing retirement

Many pension funds provide a lifestyle investment strategy or ‘retirement glidepath’. Basically, your pension fund will be rebalanced in the run-up to retirement, reducing your exposure to volatility or “risk-on assets” and moving a chunk of it into “risk-off assets” or cash for your tax-free lump sum. The remaining pension pot will be invested based on your available drawdown options.

If you are approaching retirement, if you are within five years of retirement, it is important to know how your pension assets are invested, to ensure that you invested in a way that is appropriate for your post-retirement plans.

Here to help you navigate your way.

The CIF Pension Administration Services (CPAS) team are qualified Pension Consultants. We specialise in helping professionals in the construction sector and related industries. Our team can work with you to review your pension plans.

 

For more information, please contact David Granahan at d.granahan@cpas.ie