Coronavirus and your uk pension:
Since the coronavirus outbreak, stock markets have fallen significantly and are volatile with large swings occurring daily, this will have an impact on your UK pension as the funds are directly invested in the stock market, although this does not apply state pension is unaffected by fluctuations in the stock market as the government pays a fixed amount monthly.
If you’re currently paying into a workplace pension and have several years before you’re planning to draw on your pension, then there is time for your pot to achieve growth over the long term and recover from fluctuations in the stock market that occur in the short to medium-term. Historically, the stock market will recover in the following years.
Now may be a good time to consider increasing your contributions while the market is low. A small increase in pension contributions could make a difference to your final pot size if it coincides with market recovery. Every contribution you make is enhanced by 20 per cent tax relief and if you’re a higher rate taxpayer you can get even more. Your employer may also match any increased contribution.
If you’re close to retirement or considering it within the next 3 years, you may have seen your funds lifestyled. It aims to align your pension savings with your plans for using them, and help you reduce the risks you face with your pension savings as you approach your retirement age.
This means your pension will have been moved into less risky funds such as cash, gilts or bonds. Which won’t be a liable to volatile stock market fluctuations, however, that doesn’t mean your pension won’t have taken a hit, but it should be less than if you had remained invested in shares.
Not all pension schemes offer automatic lifestyling so you should check what type of funds your pension is invested in.
If your pension is still invested mostly in shares, don’t panic. In time, markets are likely to recover. Depending on when you are planning to retire, you may have to consider taking a lower income or retiring later.
What is very important is that you have a choice, before you make any decisions about your UK pension you should seek professional advice and guidance from a qualified financial advisor.