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Pensions & Investments

Why has my pension lost money?  

  • Pensions are invested in a range of assets, including in shares of companies. This helps those companies to grow and means your pension can benefit from that growth.  
  • Being invested means your pension will change in value. Over time, the value of pensions tends to go up. However, recent stock market volatility, as a result of Coronavirus, will have resulted in the value of some pensions going down. 
  • If you’re close to retirement and in a workplace pension, in most cases your pension will have been gradually moved into less risky assets which will have helped cushion the impact of the falls. All workplace pensions have to have a plan for how to manage investments based on how they think customers will access their pensions, so do get in touch with your provider if you are unsure. 
  • 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 should I do? 

  • If you are concerned about how Coronavirus is affecting the economy and the value of your pension, you can get in touch with your pension provider, or the Government’s Money and Pensions Service.  
  • Remember that pensions are long-term investmentsMost importantly, stay calm and don’t rush financial decisions. 

What if I want to access my pension? 

  • If you want or need to take money out of your pension, you will need to think carefully about all of your options, including whether now is the right time to do so.  
  • You can contact Pension Wise, which is part of the Money and Pensions Service, or check with your provider about your options.  
  • You can also pay a financial adviser who will be able to give you a personal recommendation based on your individual circumstances. 
  • This is a time of uncertainty, but decisions like these can have long-term impacts and it is important to stay calm and not rush financial decisions. 
  • If you have other sources of finance, there may be fewer long-term risks if you access those first (depending on what these are e.g. cash savings). 
  • The Government has announced a range of measures to offer support to people during the pandemic. You may wish to investigate whether you are eligible for this support before withdrawing money from your investments.  

I’ve been contacted about moving my pensions – should I? 

  • In difficult times like these scammers try to take advantage of uncertainty to convince people to take decisions they wouldn’t otherwise make. If someone you don’t know has approached you about transferring your pensions unprompted, it may well be a scam. 
  • Scams can take many forms and often appear to be a legitimate investment opportunity. 
  • The regulators recommend four simple steps consumers can take to protect themselves from pension scams: 
    • Reject unexpected pension offers whether made online, on social media or over the phone. 
    • Check who you’re dealing with before changing your pension arrangements – check the FCA Register or call the FCA helpline on 0800 111 6768 to see if the provider you are dealing with is authorised by the FCA. 
    • Don’t be rushed or pressured into making any decision about your pension. 
    • Do not make any decisions under pressure and remember that if the offer seems too good to be true, it probably is. If you have any concerns, you should talk to your pension provider or the Money and Pensions Service. You can also visit the FCA’s ScamSmart website and use their checklist to find out more. 

I take a flexible income from my pension – should I stop? 

  • If you are taking a flexible income from your pension it is likely that it will still be invested. This means that it could have been impacted by recent stock market volatility and gone down in value. Pensions are a long-term investment and the stock market tends to recover after difficult times. Whilst we appreciate this is not an option for everyone, you may want to consider using other forms of income in the short term to avoid depleting your fund.  
  • If you want to talk to someone about this you can contact Pension Wise, which is part of the Money and Pensions Service, or check with your provider about your options. 

I’m under 55 and I need to pay bills. Can I access my pension? 

  • These are unprecedented times and the desire to try and access long-term savings is understandable, but in the vast majority of cases you cannot legally access your pension before the age of 55. Unless you were in a pension before 2006 that allowed you to access it before age 55, your provider will not allow you to 
  • If you transfer your pension to a company that claims to allow you to access to your pension before age 55, it could be a scam and the consequences could be disastrous. Accessing your pension before the age of 55 can lead to HMRC applying a 55% tax charge on your savings.  
  • If you want to talk to someone about this, you can contact Pension Wise, which is part of the Money and Pensions Service, or check with your provider about your options.  
  • The Government has announced a range of measures to offer support to people during the pandemic. You may wish to investigate whether you are eligible for this support. A summary of this support can be found on the Money and Pensions Service Website. 

I’m over 55 and I need to pay bills. Can I access my pension? 

  • If you are over 55 you can access your pension, but such decisions should never be taken quickly. Accessing your pension now could have tax implications and it is vital to fully understand the decision you are making.  
  • Making decisions about your pension based on short term circumstances - especially at a time of market volatility - can have significant long-term consequences for your financial wellbeing and retirement. 
  • If you are still working and contributing to your pension you may find that, after accessing it, you are unable to contribute as much in a tax efficient way. 
  • One way of accessing your pension is through a tax-free lump sum. However, if you take tax free lump sum now, you might not be able to take another one later. 
  • If you are yet to access your pension, some of it may still be invested. The value of many investments has fallen significantly over the last few weeks and there may be further falls as Covid-19 continues to have an impact on the economy. When markets fall like this, many people are tempted to withdraw their money to protect it. This can lead to the investment being sold at loss that might have been avoided if the investment were held for the long term. 
  • The Government has announced a range of measures to offer support to people during the pandemic. You may wish to investigate whether you are eligible for this support before withdrawing money from your investments. A summary of this support can be found on the Money and Pensions Service Website. 

 Money is tight and I want to opt out of making pension contributions 

  • Whilst opting out of pension contributions can seem like a tempting option in difficult times, it can also do long term damage to your retirement prospects.  
  • Saving into a pension is the most efficient way of saving for retirement and if you opt out you risk losing: 
    • Employer contribution – In most cases when you pay into your pension your employer will be putting in a contribution worth at least 3% of your salary. If you opt out this is lost. 
    • Tax Relief – Your pension contributions are taken from pre-tax income which could mean that 20% you would have paid in tax goes into your pension, for a basic rate taxpayer. 
  • If you continue to save into your pension you may benefit as it will be invested at a lower price than before the market downturn. 
  • The Government has announced a range of measures to offer support to people during the pandemic. You may wish to investigate whether you are eligible for this support. A summary of this support can be found on the Money and Pensions Service Website.