With the coronavirus pandemic continuing to put pressure on the financial market, it is no wonder that many people are worried about the security of their investments, particularly when it comes to pensions. But with history teaching us that the markets will correct themselves, the important thing at present is not to take ‘panic’ action, as George Square Financial Management explains.
Defined contribution pensions
Whether private or through work, if you have a defined contribution pension, it will likely have been affected by the recent market downturn. This is because pension schemes tend to invest in the stock market, so significant fluctuations will impact how much is in your pot.
While it’s understandable that the current financial landscape may be a cause for concern for many savers, it’s important not to panic. Pension savings are typically a long-term investment, and history and experience have taught us that the markets will correct themselves in due course. If you’re young, you will therefore have plenty of time for markets to recover before you take your pension.
For those closer to retirement, it’s worth noting that the older you get, the more work schemes are inclined to invest in safer assets to limit risk to your pension, such as bonds. Bonds are very low risk, and usually offer a fixed rate of return. Private pensions are more likely to be tailored to your own circumstances, risk profile and objectives.
How much is in my pot?
To find out the value of your pension, contact your pension providers. If you’re unsure who your pension providers are, you can get in touch with your former employers to find out. You could also contact the Pension Tracing Service, which can help you find the details you need to locate any pensions that may have been misplaced. Further details on how to trace a lost pension can be found here.
If you would like the team at George Square Financial Management to investigate a lost pension on your behalf, please get in touch and we’d be happy to help.
Since 6 April 2015, British citizens have been able to access their private pension savings from the age of 55. This provides greater freedom in deciding what to do with your money even if you are still working.
If you are at this age now, it may be tempting to withdraw your pension earlier than you were previously planning, particularly if your job has been affected by the coronavirus pandemic. However, there is a substantial risk that taking ‘panic’ action might not be in your best, longer-term interests. It’s certainly worth considering all your options before making any rushed decisions. For instance, you may still be entitled to government support such as Universal Credit. The Universal Credit standard allowance and working tax credit basic element will both be increased by £1,000 for the next 12 months.
Generally speaking, weathering the storm is usually the recommended course of action; the more you are able to leave invested, the more you will benefit if stock markets recover. If you do have any concerns, seeking professional advice is always a sensible step to take to ensure you are making an informed decision that is in your best financial interests.
Get in touch
George Square’s experienced pension advisers are always available to help you navigate your way through pension planning. We can explain the options available to you and help you identify the most appropriate way of saving for retirement, whatever your age, circumstance, and requirements.