Stock markets at home and around the world have been volatile due to concerns around the conflict in Ukraine. Whilst our first thoughts are for all those impacted by the conflict, stock markets have reacted to the uncertainty and likelihood that there will be an impact on global economic growth this year.
Other immediate impacts may include price increases on commodities (such as oil and gas) and an increase in global inflation. The longer term implications are unknown. As a result, investors are naturally concerned about the value of their investments.
You may be wondering what the implications are for your pension. The first thing to say is that it’s important to remember that stock market rises and falls are part and parcel of any investment, including Pensions. As long as you’re not retiring in the very near future, short term market volatility is generally smoothed out over the long term. Past crises such as the 2008 financial crisis, the conflict in Iraq, and the start of the Covid pandemic show that markets tend to recover given time.
Another way of thinking about it is with stock markets having fallen in recent weeks, the Unit Price of each of our Funds that invest in stock markets is lower, so any regular pension contributions you’re making are buying more “units” for your money, giving you the potential for growth in value over the long-term particularly if retirement is a long way off.
If you’re nearing retirement, you may be using our Glidepath to help protect you from stock market ups and downs in the run up to your retirement. Most of our customers choose this option as it gradually moves your pension savings from our higher risk Growth Fund 3 into our lower risk Defensive Fund in the years before your retirement age. This helps to defend and protect the value of your pension during this time of volatility.
Another relevant point is that when it comes to investing in a pension over the long term, share prices are not the be all and end all. Share dividends can also play a part in growing your pension, because even when stock markets are falling many companies will still pay dividends boosting the value of your pension.
So while we do recognise that stock market ups and downs can be concerning, the most important thing to remember is that your pension should be seen as a long term commitment and not assessed on short term volatility.
Please bear in mind, the value of your investment can go down as well as up and you may get back less than you invest. Pensions are designed to be a long term investment. If you stop or reduce your payments you will reduce the amount you get back from your pension.
Need some help?
If you have any concerns or would like to discuss your options, please call us and we will do our best to answer any questions you may have.
We are not able to give advice and, if you are unsure about what is right for you we recommend that you speak to your financial adviser, or visit unbiased.co.uk Link opens in a new window to find an independent financial advisor in your area to speak to.
03456 10 20 30
Calls may be monitored or recorded. Lines are open 8am - 9pm, Monday to Friday, 9am - 6pm Saturday.
Current call charges and information.