WEBVTT 00:00:00.080 --> 00:00:03.100 Welcome back to Time to Retire. Now, we've all 00:00:03.100 --> 00:00:05.259 been worried about the comfort in Iran over the 00:00:05.259 --> 00:00:08.160 last few weeks. I mean, it's a tragedy on a human 00:00:08.160 --> 00:00:11.480 level. But as retirees, we've also got to look 00:00:11.480 --> 00:00:14.560 at those cold, hard numbers and how they're affecting 00:00:14.560 --> 00:00:18.140 our pensions. Our petrol prices, as we know, 00:00:18.300 --> 00:00:22.719 are up over 10 % in the month. Oil is hovering 00:00:22.719 --> 00:00:26.019 near $100 a barrel. There's a new word dimming 00:00:26.019 --> 00:00:28.699 around in the pension circles, which is fossil 00:00:28.699 --> 00:00:32.700 flation. It's the idea that our dependence on 00:00:32.700 --> 00:00:34.719 old -school Nigeria is making our retirement 00:00:34.719 --> 00:00:37.719 more expensive, our pension pots more volatile. 00:00:38.179 --> 00:00:40.920 So what we'll look at today is how this conflict 00:00:40.920 --> 00:00:45.280 is hitting our pockets right now and why ethical 00:00:45.280 --> 00:00:47.679 investments isn't just for activists anymore. 00:00:47.780 --> 00:00:50.780 It might actually be the most common sense way 00:00:50.780 --> 00:00:55.159 to protect our wealth as pensioners. Now, I've 00:00:55.159 --> 00:00:57.659 been away for the chill for a couple of months 00:00:57.659 --> 00:01:00.619 and... As part of my retirement plans, I'm taking 00:01:00.619 --> 00:01:03.600 a degree in audio production and I've spent much 00:01:03.600 --> 00:01:05.900 of the last couple of months hunkered down in 00:01:05.900 --> 00:01:10.640 a dark recording studio. But I'm finished year 00:01:10.640 --> 00:01:13.000 one now and I'm not back actually for another 00:01:13.000 --> 00:01:15.900 five months. So I'm looking forward to a long 00:01:15.900 --> 00:01:19.579 hot summer, hopefully. I'd highly recommend a 00:01:19.579 --> 00:01:22.819 degree for anybody who's newly retired. If you 00:01:22.819 --> 00:01:25.400 get the opportunity, you can spend time with... 00:01:25.819 --> 00:01:28.980 the younger group of adults, I found really broadened 00:01:28.980 --> 00:01:31.840 my perspective and also boosted my energy. It's 00:01:31.840 --> 00:01:37.719 fantastic. So what is fossil flation? Oh, pretty 00:01:37.719 --> 00:01:40.439 simple really. When the Straits of Hormuz gets 00:01:40.439 --> 00:01:43.579 restricted, like we're seeing now, global energy 00:01:43.579 --> 00:01:47.099 supplies tighten because almost everything requires 00:01:47.099 --> 00:01:53.159 energy to make it or move it. Now, the OBR has 00:01:53.159 --> 00:01:56.560 warned that this conflict could add a full 1 00:01:56.560 --> 00:02:00.500 % to UK inflation by the end of the year. Now, 00:02:00.519 --> 00:02:03.840 if you're on a fixed income pension, that's a 00:02:03.840 --> 00:02:08.060 1 % pay cut. But there's also considerations 00:02:08.060 --> 00:02:12.060 for your investment pot. Most UK pensions are 00:02:12.060 --> 00:02:15.360 still quite heavily weighted in traditional oil 00:02:15.360 --> 00:02:18.770 and gas. Now, while these companies... You may 00:02:18.770 --> 00:02:21.550 see some short -term profits from the high prices. 00:02:21.590 --> 00:02:25.330 The volatility is what's killing the long -term 00:02:25.330 --> 00:02:30.330 planning. Now, get one piece talk failure and 00:02:30.330 --> 00:02:33.810 those share prices can drop 15 % in an afternoon. 00:02:34.129 --> 00:02:37.310 And that's what's referred to as fossil inflation. 00:02:37.469 --> 00:02:41.949 It's the cost of being tied to volatile old -world 00:02:41.949 --> 00:02:47.139 energy systems. Now, the reality... as we move 00:02:47.139 --> 00:02:50.139 towards the summer of 2026, is that the Iran 00:02:50.139 --> 00:02:54.520 situation has disrupted 20 % of the world's oil. 00:02:54.740 --> 00:02:57.639 Now, for your pension, that creates two big risks. 00:02:58.439 --> 00:03:02.759 First, there's the off -term price gap. Analysts 00:03:02.759 --> 00:03:04.740 are already saying household bills could jump 00:03:04.740 --> 00:03:09.840 by 10 % by July. Now, if you're drawing a set 00:03:09.840 --> 00:03:12.919 amount from your SIP, you might need to rethink 00:03:12.919 --> 00:03:16.569 your budgets now to... Avoid any nasty surprises 00:03:16.569 --> 00:03:20.449 in the summer. Secondly, we've got the interest 00:03:20.449 --> 00:03:23.810 rate U -turn. Now, we're all hoping for rate 00:03:23.810 --> 00:03:27.469 cuts out now, aren't we? Well, with energy prices 00:03:27.469 --> 00:03:30.349 driving back up over 3%, the Bank of England 00:03:30.349 --> 00:03:33.789 is likely to keep rates higher for longer. If 00:03:33.789 --> 00:03:36.849 you're looking to buy an annuity or move into 00:03:36.849 --> 00:03:40.590 bonds, this conflict has completely shifted the 00:03:40.590 --> 00:03:45.939 goalposts. For years, people thought ESG and 00:03:45.939 --> 00:03:49.400 social governance was just about doing good. 00:03:49.539 --> 00:03:52.879 But in 2026, it's increasingly about risk management. 00:03:53.379 --> 00:03:55.000 So if you look at it this way, if your pension 00:03:55.000 --> 00:03:59.180 is heavily invested in fossil fuels, you're doubling 00:03:59.180 --> 00:04:03.300 down on the very thing that is making your cost 00:04:03.300 --> 00:04:06.020 of living more expensive. It's like betting against 00:04:06.020 --> 00:04:11.060 yourself. Many of the top performing ethical... 00:04:11.439 --> 00:04:13.900 or sustainable funds are actually focused on 00:04:13.900 --> 00:04:17.060 renewables and infrastructure. Now these assets 00:04:17.060 --> 00:04:20.100 don't care about the streets of Hormuz. They 00:04:20.100 --> 00:04:23.040 care about the wind blowing and the sunshine. 00:04:23.439 --> 00:04:27.839 By diversifying into these, you're not just being 00:04:27.839 --> 00:04:31.519 green, you're actually insulating your retirement 00:04:31.519 --> 00:04:36.199 from this Middle Eastern geopolitics. It's about 00:04:36.199 --> 00:04:38.819 building a buffer against this fossil flation. 00:04:40.879 --> 00:04:45.240 So what do we actually need to think about? Well, 00:04:45.300 --> 00:04:47.860 you don't need to be an expert. I mean, have 00:04:47.860 --> 00:04:52.199 a look at your default fund. Most of us are in 00:04:52.199 --> 00:04:55.819 a default option with our workplace or even private 00:04:55.819 --> 00:04:59.459 pension. Usually these have around 5 % to 10 00:04:59.459 --> 00:05:03.420 % exposure to fossil fuels. But if we look at 00:05:03.420 --> 00:05:06.620 sustainable alternatives, most providers like 00:05:06.620 --> 00:05:11.459 Aviva or Nest or... Hargreaves lands down they 00:05:11.459 --> 00:05:15.459 now offer a sustainable or what they call a socially 00:05:15.459 --> 00:05:19.500 responsible version of their main funds so check 00:05:19.500 --> 00:05:22.019 the performance you might be surprised to see 00:05:22.019 --> 00:05:25.759 that many of the ethical funds have matched or 00:05:25.759 --> 00:05:28.899 even beaten the standard ones because they actually 00:05:28.899 --> 00:05:33.360 avoid this huge boom and bust cycles within the 00:05:33.360 --> 00:05:38.040 oil market so this isn't about politics it's 00:05:38.040 --> 00:05:42.459 about asking, is our money in the 19th century 00:05:42.459 --> 00:05:47.540 industry or in a 21st century industry? Now the 00:05:47.540 --> 00:05:50.680 conflict in Iran is a reminder that the world 00:05:50.680 --> 00:05:55.259 is still interconnected. So don't wait from that 00:05:55.259 --> 00:05:59.040 letter from your supplier. Review your pension 00:05:59.040 --> 00:06:02.660 oil exposure. Is your pot betting on the very 00:06:02.660 --> 00:06:05.600 thing that's hurting your wallet? I've made a 00:06:05.600 --> 00:06:08.699 pivot and I've looked at moving around 10 % to 00:06:08.699 --> 00:06:13.160 20 % of my portfolio into energy transition funds. 00:06:13.319 --> 00:06:15.899 And this is a bit of a hedge, really. We want 00:06:15.899 --> 00:06:18.939 a retirement that's stable, not one that's at 00:06:18.939 --> 00:06:22.720 the mercy of the next news cycle. So let me know 00:06:22.720 --> 00:06:25.939 in the comments. Have you looked at any ethical 00:06:25.939 --> 00:06:29.220 options in your pensions lately? Or do you think 00:06:29.220 --> 00:06:32.000 sticking with traditional funds is the right 00:06:32.000 --> 00:06:34.629 way to go for now? But as always, keep it savvy, 00:06:34.810 --> 00:06:37.910 keep it common sense. I'm Eric, and this is Time 00:06:37.910 --> 00:06:38.470 to Retire.