Author: Jenny Pearce / March 17, 2020
We are all aware of the current situation with the accelerated spread of the covid-19 pandemic. We really are in unprecedented times and Governments are mobilising both on the Health and Financial front to support those that fall ill and to stabilise and assist businesses and the World Economies as a whole.
If you have looked online at the current value of your pension then you will notice that it has fallen in value. It will not have fallen as far as the major indices have, the FTSE 100 that we all tend to look at has fallen from a peak of 7,727 to 4,974 as I type this a fall of almost 36%, the Dow Jones has also fallen from 29,568 to 20,776 currently a fall of around 30%. Your pension is not invested entirely in shares so will not have suffered as much although it will be worth less than it was.
Stock Markets always look ahead, at the moment the uncertainty around the impact of covid-19 on global growth is the market’s major concern, along with the fact that profits from all companies will be lower, than had been anticipated just a few weeks ago, which means that prices are being marked down. The fact is that no one knows when this pandemic will be under control and how much damage it will do the World Economies, we will however get through this and things will in due course recover. You have probably read about the recovery being ‘U shaped’ as opposed to ‘V shaped’. In simple terms it means that the investment managers expect it take longer than they had initially thought.
Obviously, those of you nearer to retirement will have greater concerns about the market falls, however, the pension schemes that we run are set up on a ‘Lifestyling basis’ which means that the risk of the portfolios are gradually reduced during the 15 years prior to the normal retirement date for the scheme which defaults to 65, unless you have specifically opted out of ‘lifestyling’ by choosing your own funds.
The silver lining on the horizon is that your contributions are paid on a monthly basis so you will be buying more units this month than you were last month and in due course as some normality returns to the market you will then benefit. Please remember you receive tax relief at your marginal rate on your own contributions.
If you should have any questions then please feel free to get in touch.
Jon Isaacs FPFS
Chartered Financial Planner
3DIFS Employee Benefits & Wealth Management