UK pensions hit by market decline
UK pensions have been hit by the economic problems stemming from the coronavirus outbreak, as around 7.5 million low and moderate earners in Britain have lost between 13% and 18% of their pension savings since the coronavirus crisis began.
The National Employment Savings Trust (NEST) - default pension fund used by 400,000 employers auto-enrolling their staff, said that its members had avoided the worst extremes of the stock market slump, but were not exempt.
NEST has revealed that scheme members between the age of 27 and seven years before their planned retirement, had lost 17.6% of their saving’s value since the beginning of the year.
Those under the age of 27, whose pots are invested in a slightly less risky mix of assets, had lost a total of 13.3% However, older members within seven years of their planned retirement age had fared better because their savings were invested in safer assets. An average member planning to retire this year had lost only 0.6%, The Times reports.
The drop comes after years of relatively strong returns, including last year when the majority of members were set to benefit from a 16.9% return on the back of strong share markets.
A large proportion of members of other defined-contribution pension schemes are expected to have lost substantially more. World share markets have plummeted by 33% since January 1st.
The FTSE 100 index of Britain’s biggest quoted companies has also dropped by 34%.
Mark Fawcett, chief investment officer of NEST, said: “Pension saving is a long game — people can be saving for up to 40 or even 50 years, so it’s important not to forget the bigger picture. Younger savers should comfortably ride out shorter-term fluctuations and at Nest we take steps to protect members’ pots as they get closer to retirement.”
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