Investment volatility and your pension

If you’ve seen recent headlines about investment markets dropping in value, you might be wondering what it means for your pension…

The good news is that pensions are invested with the long term in mind, and our investment approach is designed to weather short-term market changes such as this.

We understand that you may still feel uneasy about drops in the market, especially if you are close to retirement. So, here’s a summary of how investment markets affect your pension savings and some things to consider if you are concerned… 

For Defined Benefit (DB) members

If you’re a Defined Benefit (DB) member, your pension is based on your salary and how long you’ve worked, rather than on daily market movements. So even though markets can go up and down, your DB pension remains unchanged.  You can read more about DB benefits in your Member Guide.

If you pay Additional Voluntary Contributions (AVCs) these work slightly differently and market performance plays a more significant role. AVCs are paid on a defined contribution (DC) basis and go into a fund with the LifeSight Master Trust, which is separate to your normal Scheme contributions. You can read more about this below. 

For Defined Contribution (DC) members and DB members paying AVCs

When you pay into a DC scheme, like the LifeSight Master Trust, your money is invested into funds with the aim of building your savings over time. How these funds perform plays a significant part in determining how much money will be in your pot when you come to retire.  

The value of the investment funds is likely to change over time - it can go down as well as up. This is normal. High-risk funds are likely to have bigger and sharper rises and falls in value over the short-term, but long-term they are expected (although not guaranteed) to grow more in value. 

You can find more information about your investment funds, and the options available, within your LifeSight Account. 

Please remember to check your investment funds regularly to make sure they’re still suitable for you.

You may want to speak to an Independent Financial Advisor before making any changes, particularly if you’re close to retirement and aren’t planning to invest for the longer term. You can find an IFA in your area at unbiased.co.uk

More information on the recent market performance

It’s been widely reported that stock markets have gone down in value in recent months. This is largely due to events in the US, as President Trump announced trade tariffs in early April which caused uncertainty among investors about how companies would perform in future. Because of this, the share price of many companies dropped in value.  

Historically, markets bounce back over time, although there’s no guarantee of this happening or even how long that might take. We will continue to monitor the situation and will share further information if/when needed.