In a world of shifting markets, global tensions, and political unpredictability, it’s understandable to feel uneasy if you’ve logged into your pension account and noticed a dip in value. Whether it’s a workplace pension, a private plan, or a combination of the two, a falling balance can feel unsettling.
But before making any big decisions, it’s important to understand why this is happening, what it means in the long run, and what your options really are.
Why is My Pension Losing Value?
Market volatility has become something of a norm over the past few years. Events like Brexit, Covid, inflation pressures, the Russia–Ukraine conflict, and more recently, US tariff policies, have all made their mark on global markets. Since most pension pots are invested in stocks, bonds, and other financial instruments, that turbulence can directly affect the value of your savings.
But a pension isn’t like a current account. It’s a long-term investment, designed to grow over decades. Ups and downs are expected. The key is how your money performs over the full investment journey, not just in a moment of market dip.
Will My Pension Recover?
It’s very likely, yes. Historically, investments in shares have outperformed cash over the long term, even with periodic dips. While past performance is no guarantee of future returns, market downturns are often followed by recovery.
So, while seeing dropping numbers on your statement might cause concern, what matters more is what those numbers look like in ten, fifteen, or twenty years. If retirement is still some way off, you have time on your side.
What Should I Do if My Pension Value Drops?
One of the biggest mistakes investors make is reacting emotionally to short-term changes. Making knee-jerk decisions can lock in losses that might otherwise have recovered.
If your pension value has fallen, consider the following:
1. Check the Facts
Log in to your pension account, or contact your provider, to see how your funds are performing overall. This gives you a clearer picture of the situation and avoids assumptions.
2. Understand What You’re Invested In
Most pensions are invested in a mix of assets – some more volatile than others. The level of risk you’re exposed to depends on your fund choices. Some pension plans automatically become less risky as you near retirement age (a process known as “lifestyling”).
If you’re unsure about where your money is invested, speak to your provider or a financial adviser.
3. Stay Focused on the Long Term
Unless you’re planning to access your pension soon, short-term dips shouldn’t drastically alter your retirement plans. Markets recover – and reacting too quickly could mean missing out on that rebound.
Can I Switch to a Different Pension Fund?
Yes, many pension providers allow you to move your savings into different funds. You might be able to reduce your exposure to risk, or move into funds that align better with your retirement goals.
However, switching isn’t without potential downsides. Frequent changes can lead to additional charges or poor timing – moving out of a fund after a drop could mean locking in losses. Like most long-term investments, pensions need time and consistency to grow. Constant switching can do more harm than good.
Can I Pause My Pension Contributions?
If you stop contributing to your pension, you’ll lose out on:
Tax relief
Employer contributions
Growth on new savings
You might also find that the increase in your take-home pay is smaller than expected. This is because your National Insurance contributions and student loan repayments may rise when your pension deductions stop.
Stopping contributions may offer a short-term financial boost, but it can significantly reduce your future retirement income.
Tracing Old Pension Pots
You’re not alone. Many people build up several pensions over the course of their career and lose track of old pots.
We can help you trace your pensions and consolidate them if appropriate. Bringing your pots together may give you a clearer view and could reduce fees, but it’s essential to check whether you’d be giving up any valuable guarantees or benefits in the process.
When Should I Get Advice?
It’s always worth speaking to a financial adviser if:
- You’re within ten years of retirement and unsure whether your pension is on track
- You’re considering switching pension funds
- You’re thinking of accessing your pension early
- You’ve got multiple pension pots and want to simplify them
At Osborne Financial, we don’t believe in one-size-fits-all advice. We take the time to understand your full financial picture, your goals, your risk appetite, your retirement hopes, and help you make informed decisions about your pension and other long-term savings.
Final Thoughts
Pension performance will fluctuate. That’s part of long-term investing. What matters is how you respond and whether your pension is aligned with your future plans.
Our team will help simplify complex financial decisions, ensuring you’re fully prepared for retirement. If you’d like guidance on pensions planning, contact us.
The information provided in this article is for informational purposes only and does not constitute financial advice. Please consult a qualified financial adviser to discuss your specific circumstances.
