Welcome back to Time to Retire. Now, we've all
been worried about the comfort in Iran over the
last few weeks. I mean, it's a tragedy on a human
level. But as retirees, we've also got to look
at those cold, hard numbers and how they're affecting
our pensions. Our petrol prices, as we know,
are up over 10 % in the month. Oil is hovering
near $100 a barrel. There's a new word dimming
around in the pension circles, which is fossil
flation. It's the idea that our dependence on
old -school Nigeria is making our retirement
more expensive, our pension pots more volatile.
So what we'll look at today is how this conflict
is hitting our pockets right now and why ethical
investments isn't just for activists anymore.
It might actually be the most common sense way
to protect our wealth as pensioners. Now, I've
been away for the chill for a couple of months
and... As part of my retirement plans, I'm taking
a degree in audio production and I've spent much
of the last couple of months hunkered down in
a dark recording studio. But I'm finished year
one now and I'm not back actually for another
five months. So I'm looking forward to a long
hot summer, hopefully. I'd highly recommend a
degree for anybody who's newly retired. If you
get the opportunity, you can spend time with...
the younger group of adults, I found really broadened
my perspective and also boosted my energy. It's
fantastic. So what is fossil flation? Oh, pretty
simple really. When the Straits of Hormuz gets
restricted, like we're seeing now, global energy
supplies tighten because almost everything requires
energy to make it or move it. Now, the OBR has
warned that this conflict could add a full 1
% to UK inflation by the end of the year. Now,
if you're on a fixed income pension, that's a
1 % pay cut. But there's also considerations
for your investment pot. Most UK pensions are
still quite heavily weighted in traditional oil
and gas. Now, while these companies... You may
see some short -term profits from the high prices.
The volatility is what's killing the long -term
planning. Now, get one piece talk failure and
those share prices can drop 15 % in an afternoon.
And that's what's referred to as fossil inflation.
It's the cost of being tied to volatile old -world
energy systems. Now, the reality... as we move
towards the summer of 2026, is that the Iran
situation has disrupted 20 % of the world's oil.
Now, for your pension, that creates two big risks.
First, there's the off -term price gap. Analysts
are already saying household bills could jump
by 10 % by July. Now, if you're drawing a set
amount from your SIP, you might need to rethink
your budgets now to... Avoid any nasty surprises
in the summer. Secondly, we've got the interest
rate U -turn. Now, we're all hoping for rate
cuts out now, aren't we? Well, with energy prices
driving back up over 3%, the Bank of England
is likely to keep rates higher for longer. If
you're looking to buy an annuity or move into
bonds, this conflict has completely shifted the
goalposts. For years, people thought ESG and
social governance was just about doing good.
But in 2026, it's increasingly about risk management.
So if you look at it this way, if your pension
is heavily invested in fossil fuels, you're doubling
down on the very thing that is making your cost
of living more expensive. It's like betting against
yourself. Many of the top performing ethical...
or sustainable funds are actually focused on
renewables and infrastructure. Now these assets
don't care about the streets of Hormuz. They
care about the wind blowing and the sunshine.
By diversifying into these, you're not just being
green, you're actually insulating your retirement
from this Middle Eastern geopolitics. It's about
building a buffer against this fossil flation.
So what do we actually need to think about? Well,
you don't need to be an expert. I mean, have
a look at your default fund. Most of us are in
a default option with our workplace or even private
pension. Usually these have around 5 % to 10
% exposure to fossil fuels. But if we look at
sustainable alternatives, most providers like
Aviva or Nest or... Hargreaves lands down they
now offer a sustainable or what they call a socially
responsible version of their main funds so check
the performance you might be surprised to see
that many of the ethical funds have matched or
even beaten the standard ones because they actually
avoid this huge boom and bust cycles within the
oil market so this isn't about politics it's
about asking, is our money in the 19th century
industry or in a 21st century industry? Now the
conflict in Iran is a reminder that the world
is still interconnected. So don't wait from that
letter from your supplier. Review your pension
oil exposure. Is your pot betting on the very
thing that's hurting your wallet? I've made a
pivot and I've looked at moving around 10 % to
20 % of my portfolio into energy transition funds.
And this is a bit of a hedge, really. We want
a retirement that's stable, not one that's at
the mercy of the next news cycle. So let me know
in the comments. Have you looked at any ethical
options in your pensions lately? Or do you think
sticking with traditional funds is the right
way to go for now? But as always, keep it savvy,
keep it common sense. I'm Eric, and this is Time
to Retire.