What has been the impact of Covid-19 on pensions?

by Four Wealth Management Ltd 

The Coronavirus pandemic has caused financial pressures across the world. The outbreak has impacted the majority of companies across the world, including those listed on the stock market. This has resulted in market volatility and caused a decline in the value of stock market investments. Despite this period of uncertainty, the stock market is slowly starting to recover.

Pensions are a long-term investment, and although not guaranteed, the value can increase over time. Most pension schemes are invested in the stock market as historically this is a way to achieve growth over a long time period.

However the recent volatility is likely to have had a negative impact on the value of your pension fund. If you are not planning to retire imminently, it is likely that your pension pot will recover from these short-term fluctuations in the stock market.

At Four Wealth Management, our Financial Advisers have been encouraging clients to remember that their pension pots are invested over a long time frame and not to let short-term events impact their decisions. It is important to take financial advice before making decisions that could cause long-term consequences on your retirement.

Contact Four Wealth Management to book a no-obligation pension review meeting

I’m considering accessing my pension pot

If you are planning to retire in the near future or are looking to start taking withdrawals from your pension pot, you may need to consider taking a lower income than you originally planned to allow the majority of your funds to remain invested and hopefully recover. If you access your full pension savings now, you will miss out on any potential increases if the markets continue to recover.

Before deciding when to access your pension pot, you should speak to a Financial Adviser and consider all of your sources of income first. For example, you may have assets not invested in the stock market that you could use as your source of income to give your pension funds more time to potentially recover.

If you do not want to use other sources of income, you could consider delaying your retirement in order to avoid potentially compromising your lifestyle at retirement if your pension has dropped in value.

Find out more about retirement planning

I’m already retired, should I continue with my pension withdrawals?

If you are already taking regular withdrawals from your pension pot but the value of your pension has decreased, you need to think about ways to protect the longevity of your savings and make sure you have enough for your lifetime.

One option is to maintain your current withdrawal rate percentage even if this means you will be receiving less income from your pension in the short term. Increasing your withdrawal rate to make sure you still get the same monetary value in withdrawals would mean you will exhaust your savings quicker.

Another option is utilising other assets for income to reduce or even stop your pension withdrawals to allow more time for your pension pot to recover.

Should I be worried in the short term?

The Coronavirus is likely to continue to cause market movements but this should not be a cause of concern for long-term investors. Volatility in stock markets is normal and history has shown that markets usually recover once issues are resolved.

Book a no-obligation pension review

You can book a no-obligation review with a Financial Adviser to review your current pensions and see if they are on track to meet your retirement goals. Call us on 0117 973 0500 or visit: www.fourwealthmanagement.co.uk.

Four Wealth Management Ltd is an Appointed Representative of and represents only St. James’s Place Wealth Management (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the Group’s wealth management products and services, more details of which are set out on the Group’s website at www.sjp.co.uk/products.

The title ‘Partner Practice’ is the marketing term used to describe St. James’s Place representatives.