Is your pension as safe as you think it is?

How much do you know about your pension?

Has it performed well over the last year, or do you worry that it won’t provide a sufficient retirement income?

Pensions are very efficient savings vehicles, but unfortunately they are not all equal. In fact, if you’re in a zombie pension, you could actually be losing wealth.

Exposure to stock market volatility

A lot of money is invested in the stock markets, which can go up and down. This is expected and is easier to tolerate when you have a long-term investment, but as you approach retirement the last thing you want to see is a huge drop in your savings.

Let’s say you have a fund worth £300,000. You’re considering your future options – retire gradually, working part time at first, or leave the workforce completely and take an income from your savings.

Then, the stock markets crash.

Suddenly, your fund is worth only £150,000. Unless you have a back-up plan, this is likely to have a big effect on your future plans.

The market is likely to recover and recoup your losses, but it may not do it in the time you need it – you want to retire sooner rather than later, and you can withdraw up to 25% tax free from the age of 55.

This is why it is so important to have regular pension reviews, so that you know how it is performing and have no nasty surprises when you retire.

But it’s also possible to protect your pension, so if the stock markets fall your future income will not be affected.

Your retirement shouldn’t be left to chanceTake a minute to think about your ideal retirement. What does it involve?

Traveling? Fixing things around the house? Gardening? Relaxing in front of the weekend sport?

Your goal is what should motivate you to save as much as you can and to ensure your pension is doing a good job for you. It is why you are focused on maximising growth.

But there are some things you can’t control. It doesn’t matter how prudent you have been or how well you have looked after your investments – if you have exposure to it, a stock market collapse will hurt.

It doesn’t have to, though.

It’s possible to benefit from growth in stock market investments, but be unaffected by any falls it experiences. You can’t control whether or not it happens, but you can control the impact it has on your financial future.

With a protected pension, your future retirement income is insured, and you can still benefit from investment growth.

This strategy offers you the best of both worlds: the ability to capture the higher returns the market can offer, while being protected from the sharp falls that are par for the course.

To find out more about this option, click below to download our free factsheet. 

If you’d like to talk to us about your options, you can complete the form on the right or talk to a member of the team by calling 01634 733 165.

This option is not suitable for everyone so it is important to talk to a financial adviser to find out if it is appropriate for you.

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The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article. For our latest information and news, please see our articles section:

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