Why is the value of my pension going down?
The last few years have been particularly challenging for UK pension savers. Brexit, the Covid crisis, the Russia/Ukraine war and recent political events have created a lot of turbulence in the markets. That’s hit share prices and other investments. If you have workplace or personal pension savings (or both), you might have noticed their value has fallen.
Will the value of my pension recover?
A pension is a long term investment. Over the years you can expect to see its value go up and down in line with broader market movements. In fact, historically, stock market investments have tended to outperform money held in savings accounts (though when it comes to investments, past performance doesn’t guarantee future growth).
Remember you’re in control. There are many answers to the question: “My pension is losing money – what should I do?” If you’re wondering whether you should make changes, you can. But do think through your options to make sure you create long as well as short-term benefits for yourself. If you’re thinking about accessing your pension savings soon, understanding how you want to use your pension pot is really important. If you’re not sure what your options are, you can answer a few simple questions to get an understanding of what kind of decisions you’ll need to make when it comes to taking your pension. You should still seek guidance before making any final decisions though.
What should I do if I see the value of my pension falling?
First of all, don’t panic. It's important not to make rash financial decisions in the heat of the moment about long-term investments.
Matt Frain, Legal & General’s Director of Advice, talks about this in more detail in our Rewirement podcast episode, Staying financially healthy as the cost of living rises:
“It worries people when they see the value of their pension or investment falling, that’s a natural human reaction to it. But the thing that’s really important to remember, is it hasn’t really lost value or grown, they're just paper losses at this point in time. If you’ve got a long time horizon, you’re not touching that for ten, 15 years; what matters is what it's like in ten, 15 years, not what it’s like today.”
How can I keep track of my pension?
If you’re worried about your pensions, the best way to start is by seeing how they’re actually doing. Most workplace and personal pensions let you log in online to check their performance. If that’s not possible, or you’re not sure how to do it, just get in touch with your provider. They’ll help you out.
If you’ve had a few jobs, you’ve probably got several pensions. It can be surprisingly easy to lose track of them. But it can also be just as easy to find them again. Our tracking down old pensions article will take you through your options.
If you’re finding it hard to keep track of lots of different pensions, it might be worth bringing them together. Again, most providers will be happy to help you do that. But you should always check that when you move your savings out of older pensions, you don’t lose any valuable benefits.
Can I move my pension savings into other funds?
Yes, you can switch your savings into other funds. But your choice of fund can have a long-term impact on your pension savings. And choosing the right fund can be a complex decision. We recommend getting advice from a qualified financial adviser.
Can I pause my pension contributions?
Yes, you can pause your pension contributions. But you might not save as much money as you’d expect.
You’ll miss out on tax relief and tax-free investment growth, plus any contributions from your employer. And although you’ll be paying less into your pension, your National Insurance contributions or student loan payments might go up, so your net pay won’t necessarily increase by as much as you hope.
You can find out more in our Opting out of your pension article.
Can I take money out of my pension?
Once you reach 55 (rising to 57 from April 2028) you can take money out of your pension. But if the money’s no longer invested, it can’t start growing again as market conditions hopefully improve. That could have a long-term impact on the value of your investments, and your retirement age and lifestyle. You might need to work longer to top up your pension pot. It’s worth thinking carefully before you make any decisions.
If you need to access the money in your pension pot, or don’t want to risk potential further losses to the value of your pot, you should consider the long term impact that can have. Remember, drawing on your pension savings is a one-off decision. You should only access the money that you need. If you’re thinking about what to do with the money in your pension pot, our article Annuity vs Drawdown might help. They’re two options to consider if you’re looking for ways to fund your retirement.
What’s next?
Your next steps depend on your needs and circumstances. If you:
- are worried about how your workplace or personal pension’s doing, or how much you’re paying into it, and aren’t planning to retire soon, then speak to your employer or pension provider
- want to find a financial adviser, visit the Unbiased website – it’ll help you find an expert to help you. Remember that most advisers charge for their services
- are aged 50 or over and not sure how best to access your pension, book a free appointment with Pension Wise, a government guidance service from MoneyHelper – they’ll talk you through your choices.
