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Following the spread of the Coronavirus and the recent volatility in financial markets, as a member of the Baxi Group Pension Scheme , you may have questions about what it means for your future benefits.
It’s a well-known fact that stock markets do not like uncertainty and at present the scale and pace of the Coronavirus has played right into that space.
As the virus has spread, stock markets have fallen significantly over recent weeks, but this is on the back of really strong performance throughout 2019. Yes, there is uncertainty about where things will go from here – as we say, markets don’t like uncertainty – and this could continue for some time. However, it’s important to remember that pensions saving is for the long-term and that most members of the Scheme invest their pensions savings in the default strategy which is designed to gradually lower the amount of investment risk as members approach retirement.
We think that it’s worth bearing in mind these points, depending on which part of your savings journey you are in;
- If your retirement is not imminent then you still have time for markets to recover. In general, there may be plenty more bumps along the way, but it’s good to know that whenever there is a market dip then the positive side is that you can potentially gain in the future because your regular contributions will be invested into markets cheaply.
- If you are approaching retirement in the next few years and you are invested in the default strategy (like the majority of members) then your savings are in lower risk assets compared to those members in their early years of saving. This is designed to insulate savings from market movements and it is expected that volatility of asset value will be more muted.
- If your retirement is imminent (e.g. in the coming weeks or months) it is important to remember that any loss from a fall in the value of your investments is only incurred if benefits are crystallised. This means that decisions on switching, transferring and retiring should be taken carefully in times of significant market volatility like this.
- The Trustees of the Scheme, along with its advisors will continue to monitor developments.
Please note that the update above provides a general update and does not constitute financial advice. The Trustee cannot know what is right for you on an individual basis. Neither the Company, the Trustee or their advisors can provide you with individual financial advice on which fund(s) to invest in. The Trustee recommends that you consider speaking to a financial adviser to help you make any decisions regarding your pension arrangements. You will be charged a fee for this service. If you don’t have a financial adviser you can find one in your area at www.unbiased.co.uk.