Why is 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.

That can be pretty worrying. But it’s not as big a challenge as it might seem.

Will pensions bounce back?

You probably won’t be using your pension for a while. So there’s plenty of time for market conditions to change.

And 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.

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.

What should I do if I see the value of my pension falling?

First of all, don’t panic.

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). And you probably won’t be drawing on it for a while yet – not until you’re 55, or maybe 57 if you’re retiring after 2028.

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.”

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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, shrinking any pension savings you’ve made.

It’s also worth remembering that when the markets go down, investments get cheaper. That makes it potentially a good time to buy into them. You’ll get more for your money, giving you more value if and when markets go back up again.

You can find out more in our Opting out of your pension article.

Can I take money out of my pension?

Once you reach retirement age, 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 take the plunge.

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.

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